Producer sentiment continued to decline for a third consecutive month in August, as crop-sector weakness outweighs the cattle market. 

The Purdue University/CME Group Ag Economy Barometer Index fell 10 points last month to a reading of 125, the lowest reading since October 2024. Sentiment continued to differ widely between respondents from crop and livestock operations. 

Beef cattle operations have reported better profitability as the U.S. cattle herd sits at the lowest inventory since 1951. Crop prices have weakened considerably in 2025 relative to previous years. 

The Farm Financial Performance Index was particularly weak last month due to weak crop prices. While crop prices have fallen, input costs remained strong throughout the first half of the year, leading to deteriorating financial conditions. 

“Crop prices that stand below the cost of production for many farms help explain why more farmers expect weaker incomes for the coming year,” the authors noted.

Higher production costs and declining crop prices have led to deteriorating farm income and credit conditions throughout the Midwest and Plains states in the second quarter. 

According to the Federal Reserve Bank of Kansas City, loan repayment rates declined in the second quarter of 2025 compared to a year ago. A survey of agricultural credit conditions showed that 30 percent of bank respondents in the Chicago and Kansas City Districts reported lower repayment rates than a year ago. 

Meanwhile, loan demand has been rising, along with increasing capital requirements. According to the Ag Economy Barometer, 22 percent of survey respondents expect their loan sizes in 2026 to be larger than a year ago, compared to 18 percent of respondents in a January survey. 

Chapter 12 bankruptcy filings are up 56 percent in the second quarter of 2025, compared to last year. 

“If the commodity market doesn’t significantly improve, our farmers in this area are going to have a tough time making any profit for the second year in a row,” an Iowa respondent said in the Chicago Fed survey. 

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