Corn Price Expectations and Their Influence on Farmland and Financial Sentiment

Tirsana Khadka and Chad Fiechter

No 360673, 2025 AAEA & WAEA Joint Annual Meeting, July 27-29, 2025, Denver, CO from Agricultural and Applied Economics Association

Abstract: Farmers routinely form expectations about future commodity prices in the face of uncertainty. These beliefs influence financial planning, land valuation, and broader economic sentiment. However, little is known about how directional price expectations—such as anticipated increases or decreases—translate into farmers’ sentiment across multiple domains. This study uses direct survey responses from the Purdue University–CME Group Ag Economy Barometer to examine how subjective corn price expectations affect short- and long-term beliefs about farmland values, farm financial conditions, and the general agricultural economy. Drawing on repeated cross-sectional data and estimating ordered logistic regression models, we find that corn price expectations meaningfully shape farmers’ short-term outlooks, particularly regarding their own financial condition and the general U.S. agricultural economy. These effects are notably weaker for long-term expectations, especially those related to farmland values. Moreover, we observe asymmetric responses: expectations of price declines have a stronger influence on negative sentiment than price increases have on optimism, consistent with behavioral theories of loss aversion. Notably, this asymmetry does not extend to land value expectations, suggesting that belief formation varies across domains and planning horizons. Taken together, these findings offer new insight into the behavioral and temporal dimensions of agricultural decision-making.

Keywords: Agricultural Finance; Farm Management (search for similar items in EconPapers)
Pages: 40
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea25:360673

DOI: 10.22004/ag.econ.360673

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