Takeaway

Farmer sentiment weakened notably into September despite a recovery in corn and soybean prices, as surging input costs—led by diesel and fertilizer—eroded operating margins. The presenter highlights that rising expenses are depressing farm financial performance and curbing capital investments, even while long-term farmland value expectations hit new highs.

What the presenter said

• The Purdue Ag Economy Barometer fell 12 points from 135 in August to 123 in September [00:35].
• The decline was led by current conditions: the Index of Current Conditions dropped 18 points, while the Index of Future Expectations fell 9 points [00:43].
• Weakening sentiment came despite a price recovery in corn and soybeans [00:51].
• Increased diesel and fertilizer prices were the primary driver of negative sentiment, with the national average diesel price exceeding $6/gallon for the first time [01:00].
• 54% of respondents cited elevated input costs as the main factor limiting financial improvement [01:17].
• The survey was fielded September 14–18, preceding President Trump’s October 5 announcement regarding tax-exempt diesel for highway use, leaving that policy shift unreflected [01:37].
• Price gains in corn and soybeans were insufficient to offset steep rises in diesel and fertilizer expenses [03:07].
• The Farm Financial Performance Index dropped from 103 in August to 90 in September [03:54].
• The Farm Capital Investment Index declined 6 points to 39, signaling producers are delaying major capital expenditures [04:04].
• 73% of corn and soybean producers expect 2027 cash rents to remain unchanged [06:30].
• 46% of corn and soybean producers report planting cover crops, with 15% using them on over half of their acreage [07:18].
• The Long-Term Farmland Value Expectations Index reached a record high of 168 points in September, reflecting sustained structural optimism for land [08:51].
• Non-farm alternative investments, inflation, and interest rates were cited as the primary drivers influencing farmland values [09:20].
• The share of producers who believe the U.S. is heading in the "right direction" fell below 50% in September, down from 62% in H1 2026 and 71% in H2 2025 [10:18].

Trade ideas

None stated. The presenter did not put forward specific directional trade recommendations, offering instead a macro fundamental overview of deteriorating producer margins and reduced farm-level capital spending.

Levels and data cited

• US National Average Diesel: Topped "$6 a gallon" in September for the first time ever.
• Ag Economy Barometer Index: 135 points (August) vs. 123 points (September).
• Index of Current Conditions: Dropped 18 points month-over-month.
• Index of Future Expectations: Fell 9 points month-over-month.
• Farm Financial Performance Index: 103 points (August) vs. 90 points (September).
• Farm Capital Investment Index: Dropped 6 points to 39 in September.
• 2027 Cash Rent Expectations: 73% expect rates to remain flat; 47% expect increases between 0% and 5%.
• Cover Crop Adoption: 46% have planted; 22% planted in the past; one-third have planted for >10 years; 15% plant on >50% of acreage.
• Farmland Value Expectations: Long-Term Index at 168 points; Short-Term Index fell 1 point month-over-month.
• U.S. "Right Direction" Metric: 71% (H2 2025), 62% (H1 2026), falling to below 50% in September.

Risks and what would invalidate this

• Rising diesel and fertilizer prices continuing to squeeze producer margins.
• Geopolitical conflict in Iran driving further upside in fertilizer costs.
• Sustained high interest rates impacting farm balance sheets.
• Lack of near-term cash returns on cover crop investments.
• Broadening pessimism regarding the trajectory of the U.S. economy.