We take note of an auction that occurred Wednesday Jan. 22 in Henry County, Ill., for what it shows in terms of steady demand for farmland. The offering featured 78.6 acres of unimproved cropland located six miles south of Geneseo. It tallied 76.5 acres of tillable cropland and carried a PI (Productivity Index) rating of 108.9, according to Illinois Bulletin 811 ratings. The Bulletin 811 rating maxes out at 147, with 133 to 147 considered Class A cropland, 117 to 147 Class B and 100 to 116 Class C. This farm was clearly Class C cropland, according to the PI rating.
The farm sold at auction for $10,100 per acre. It was not purchased by a neighboring farmer. Rather it was purchased by a local telcom firm, which bought it for investment purposes. That’s interesting in itself. It suggests the annual return is high enough to either beat other interest-bearing financial instruments or the firm is interested in diversifying its investments. Supposedly the firm did not buy the property with plans to build on it.
More importantly, the sale is strong compared to other recent sales in the area. On Nov. 22, 154 acres sold for $10,550 per acre. This featured 141 tillable acres and carried a Bulletin 811 PI rating of 120 – Class B farmland. And on Nov. 19 93 acres with 89 tillable acres and a PI rating of 122 – Class B farmland – sold for $9,600 per acre.
(Related links: See farmland values and average cash rents in your state at AgWeb's Farmland Values Guide)
The Jan. 22 sale averaged $92.7 per PI point versus $87.9 per PI point for the Nov. 22 auction and $78.7 per PI point for the Nov. 19 auction. Of course, there are other factors at work at these auctions, including timing. The November auctions were conducted while harvest was still winding up. The Jan. 22 auction was completed with last year’s crop fully known. Meanwhile, March corn futures were still trending lower in November. They have basically trended sideways since with some signs a bottom may have formed. But futures prices are not much different from what they were in the last half of November.