Farmer Caution Grows as Global Trade Squeeze Tightens

WEST LAFAYETTE, Ind. – January 06, 2026 – American farmers are entering the new year with a growing sense of caution about the long-term health of their operations, as anxieties over global trade competition and domestic policy uncertainty begin to overshadow signs of stability at home. A slight dip in farmer sentiment in December, captured by the Purdue University/CME Group Ag Economy Barometer, reveals a complex and challenging landscape for U.S. agriculture.

The overall barometer reading fell by 3 points to 136 in December, a decline driven almost entirely by a weakening long-term outlook. The Future Expectations Index dropped 4 points to 140, while farmers' assessment of their current situation held steady. This divergence points to a specific set of fears about what lies over the horizon, even as day-to-day conditions remain stable.

"Even with some stability in expectations for their own operations, producers remain cautious about longer-term decisions," said Michael Langemeier, the barometer's principal investigator. "Uncertainty surrounding agricultural trade and growing concern about global competitiveness continue to influence how farmers think about the future."

The Brazil Factor: A Growing Shadow Over Soybeans

At the heart of this growing unease is the rising dominance of Brazil in the global soybean market. While farmers expressed broad optimism about the five-year outlook for U.S. agricultural exports in general, their perspective soured when asked specifically about soybeans, a cornerstone of American farm exports.

The December survey revealed a sharp increase in pessimism. The percentage of corn and soybean growers who expect U.S. soybean exports to decrease in the next five years jumped from 8% in November to 13% in December. Simultaneously, the share of producers expecting soybean exports to increase fell significantly, from 47% to just 39% in a single month. This data paints a clear picture of a sector rattled by foreign competition.

An overwhelming 84% of corn and soybean producers reported being concerned about the competitiveness of U.S. soybeans relative to Brazil, with a striking 45% stating they were "very concerned." This anxiety is not unfounded. Brazil has steadily expanded its soybean production and export infrastructure, consistently challenging and, in some cases, eroding America's long-held position in key international markets. This global squeeze is no longer a distant threat but a present reality influencing farmer sentiment and long-range planning.

A Crisis of Confidence in Trade Policy

Compounding the concerns over foreign competition is a deepening uncertainty regarding the effectiveness of U.S. trade policy. Farmer confidence in the ability of tariffs to ultimately strengthen the agricultural economy has been steadily eroding. In December, just 54% of producers said they believed tariffs would have a positive long-term effect, down from 59% in November and a high of 70% in the spring of 2025.

Perhaps more telling is the rise in ambiguity. The share of farmers who are simply uncertain about the long-run impact of tariff policies has more than doubled since the question was first posed last spring, climbing to 19% in December. This growing indecision suggests that the intended effects of trade policy are not translating into clear, tangible confidence on the ground.

In a fascinating counter-narrative, however, farmers' general optimism about the country's direction improved markedly. In December, 75% of survey respondents said they believe the U.S. is headed in the "right direction," the highest reading recorded since the question was introduced in July. This suggests a complex mindset where broader national confidence coexists with specific, deep-seated anxieties about the economic realities of their own industry.

The Paradox on the Home Front

While international pressures mount, key domestic indicators are sending mixed signals, creating a paradox in the heartland. Chief among the positive signs is the robust health of the agricultural real estate market. Farmer optimism about farmland values remains exceptionally strong, with the Long-Term Farmland Value Expectations Index hitting a new record high of 166 in December. The short-term index also remains elevated, standing 7 points higher than a year ago.

This confidence in the value of their primary asset, however, is not translating into a willingness to expand or upgrade operations. Despite a slight uptick in the Farm Capital Investment Index, a solid majority of producers—60%—still believe it is a bad time to make large investments in machinery or buildings. This reluctance to invest, even as land values soar, points to underlying profitability concerns.

Throughout 2025, farmers have consistently cited high input costs for essentials like fertilizer, fuel, and machinery parts as a top concern. The financial squeeze has been particularly acute for crop producers, who have seen weaker returns compared to their counterparts in the livestock sector. This pressure on profit margins helps explain the apparent contradiction: while farmers' balance sheets look strong thanks to land appreciation, their operational cash flow is under duress, forcing a defensive posture when it comes to capital spending.

A Volatile Year in Review

The December dip in sentiment caps a volatile year for the American farmer. The Ag Economy Barometer has been on a rollercoaster ride, soaring to a multi-year high of 158 in May amid a wave of optimism before plunging for three consecutive months to a low of 125 in August as concerns over profitability and input costs took hold. A brief but significant recovery in November, which saw the barometer jump 10 points, proved to be short-lived.

This latest downturn, driven by future-focused anxieties, underscores the fragility of confidence in the agricultural sector. Farmers are navigating a complex environment where the solid ground of domestic land values is being shaken by the turbulent waves of global trade. As they look ahead, the prevailing mood is one of prudence and caution, shaped by the undeniable reality that their fortunes are increasingly tied to forces far beyond their fence lines.