Farmer sentiment has dropped, according to Purdue University's ag economy barometer, with rising diesel and fertilizer costs squeezing profit expectations even as farmland values stay strong on interest from data center developers.

The barometer, compiled monthly by Purdue's Center for Commercial Agriculture, tracks producer sentiment on current conditions and future expectations. The latest reading marks a decline in optimism, driven primarily by mounting pressure from two of the biggest line items in a grower's budget: fuel and crop nutrients.

Why are input costs moving the barometer?

Diesel and fertilizer sit at the center of the decline. Both inputs touch nearly every pass across a field — tillage, planting, spraying, harvest and haulage all burn fuel, and nitrogen applications alone can account for a substantial share of cash-rented corn acreage's variable costs.

When those two categories rise together, the effect compounds. Growers face higher per-acre costs at exactly the moment commodity prices offer limited upside, compressing the margin between gross revenue and production expense. The Purdue barometer captures that squeeze in its readings on both current conditions and 12-month-ahead expectations.

For producers budgeting their next crop cycle, the practical question is timing: prepay and lock input prices now, or wait and hope diesel and fertilizer markets ease. Each choice carries basis and margin risk, and the barometer's decline suggests many growers see the cost side of that ledger worsening rather than improving.

What is holding land values up?

The same survey shows farmland values remaining strong — a striking divergence from the sentiment readings. The driver, according to the report, is interest from data center developers.

Demand for land to host data infrastructure has added a non-agricultural buyer class to farmland markets. When developers compete for parcels alongside farmers and investors, the price of land can decouple from its agricultural earning capacity. That supports balance sheets for landowners but raises the entry cost for growers trying to expand, and it stiffens cash-rent negotiations in affected regions.

The result is a two-track farm economy: weak operating margins on the income statement, supported by appreciating land on the balance sheet. Lenders typically weigh both, but operators who rent most of their acreage capture none of the land appreciation while absorbing the full input-cost increase.

What does the split mean for the year ahead?

The tension between falling sentiment and firm land values points to uneven pressure across the farm sector. Owner-operators with paid-down ground have a cushion; heavy renters and younger producers face the sharpest squeeze from diesel and fertilizer inflation.

Purdue's barometer will next show whether the cost pressure eases or whether growers cut back on applied nutrients — a decision with yield implications for the following harvest. For now, the report's message is that producers themselves are marking down the outlook: profits are tightening, input bills are climbing, and land — buoyed by data center money — is the one asset still rising.