The Purdue-CME Group Ag Economy Barometer index stood at 126 in October 2026. Producers with high absorption capacity posted a sentiment reading of 143, compared with 107 for those with low capacity.
Absorption capacity — a farm's ability to withstand market shocks — is sustained by cash reserves, crop storage, diversification of revenue streams and lower fixed costs per unit produced, among other strategies that provide a buffer in times of uncertainty. An analysis by Farmdoc, prepared by Michael Langemeier and Joana Colussi based on the October 2026 Purdue University-CME Group Ag Economy Barometer (AEB) survey, examines what that survey reveals about U.S. producers' absorption capacity.
The article proposes a scorecard based on three questions, designed so that higher scores are preferable. The questions focus on fixed costs per unit, diversification of the farm's enterprise mix and the strength of the balance sheet. To obtain a score, the values of the three individual responses are added together; each farm's score ranged from 3 to 15. A neutral score for each individual statement was 3.
The low-absorption-capacity group includes respondents with scores of 9 or below, while the high-capacity group comprises those who reached 10 or more. The average score across all respondents was 9.5, and nearly 53% scored above that average. The three most common scores fell in the middle of the range (9, 10 or 11): only three farms had a score of 3 and only five reached 15.
The October 2026 AEB index was 126, indicating more positive average sentiment than during the index's base period (the fourth quarter of 2015 and the first quarter of 2016). The AEB has two sub-indices: the Index of Current Conditions (ICC), which was 121, and the Index of Future Expectations (IFE), which was 129. The survey covered 400 producers.
There was a substantial difference in the indices between the two subgroups. The AEB index for the low-absorption-capacity group was 107, while that of the high-capacity group reached 143; the ICC and IFE averages were also considerably lower for the low-capacity group. In expected financial performance, the overall average was 94: the low-capacity group scored 87 and the high-capacity group 101, far more optimistic. The Farm Capital Investment Index, which measures whether respondents consider it a good or bad time to invest in machinery and buildings, was 47 in the low-capacity group and 63 in the high-capacity group.
More than 50% of respondents cited high input costs as the main factor limiting improvement in their farms' financial situation, and 9% said debt or financial pressure was the main limiting factor. On long-term policy questions, a broad majority of both groups considered that the increased use of tariffs has weakened the U.S. agricultural economy in the long run; this percentage was higher in the low-absorption-capacity group. In another question, a higher percentage of those in the high-capacity group indicated that the United States is headed in the right direction.
The average score for the statement on fixed costs per unit and for the one on enterprise mix was around 3, while the average for the statement on a strong balance sheet was approximately 3.5, above neutrality. Approximately 40% of respondents obtained more than 50% of their revenue from livestock production, a relatively higher percentage in the high-absorption-capacity group. When asked whether crop and livestock producers would have good or bad times over the next five years, 35% indicated that crop producers would have good times and 53% that livestock producers would have good times.
With tight margins, particularly in crops, the authors stress that it is imperative that producers evaluate their ability to withstand market shocks, and they encourage them to assess their absorption capacity with the proposed scorecard and to compare their farm's score with the distribution presented.
