Oct 1, 2014
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August 2014 Archive for Your Precious Land

RSS By: Mike Walsten, Pro Farmer

Mike Walsten has covered major business trends in agriculture for more than 40 years.

Softer Farmland Values Seen In Illinois

Aug 27, 2014

Mike Walsten

Illinois farmland values softened in the first half of 2014, according to a survey of farmland real estate professionals conducted by the Illinois Society of Professional Farm Managers and Rural Appraisers. Prices generally edged 2% to 4.1% lower, according to the Midyear Land Values Snapshot Survey conducted by the professional group.

The decline in values is for the first half of 2014 and survey respondents expect the trend in prices paid to be either stable or declining modestly over the next year, says Dale Aupperle, Heartland Ag Group, LTD., Forsyth, IL. Aupperle is overall chair of the survey. He explained that survey responded indicated that during the first half of 2014 land values decreased by 2% for excellent-quality farmland; decreased by 3.7% for good-quality land; dropped by 4.2 % for average-quality land, and by 6% for fair quality farmland.

In a normal year, excellent-quality farmland averages over 190 bu. of corn per acre, good-quality farmland averages between 170 and 190 bu. per acre, average-quality farmland averages between 150 and 170 bu. per acre, and fair-quality farmland averages below 150 bu. per acre. On July 1, 2014, farmland prices averaged $13,000 for excellent-quality farmland, $10,700 for good-quality farmland, $8,600 for average-quality farmland, and $6,700 for fair-quality farmland. This compares to $13,200, $11,200, $9,000, and $8,300 prices respectively for the same time period in 2013, said Gary Schnitkey, Ph.D., University of Illinois College of ACES, who conducts and compiles the twice-a-year surveys.

Schnitkey adds 64% of those responding indicate less farmland was sold in the first half of 2014 as compared to a year prior. "Participants were evenly divided on expectations for volume in the second half of 2014: 33% expect more land being offered for sale in the second half than last year while 38% expect the same amount of land and 29% expect less."

Farmers still leading buyers. "Local farmers are still the primary buyers," Schnitkey says, consisting of 71% of all buyers. Anticipating the future, over half (55%) expect land prices to decrease between 1% and 5% in the next year while a modest 29% expect the decrease to be larger -- between 6% and 10%.

"When you look at what is causing this softening of prices, there are a number of factors that come in to play," Aupperle explains. "The most dramatic is the drop we’ve seen in commodity prices."

He says most respondents expect corn prices to average $3.75 per bu. for the 2014 crop year. "This translates into lower returns on a per-acre basis and makes it more difficult to justify higher prices being paid for the land. Couple that with an expectation of interest rates to possibly rise over the next year, higher inputs costs and the potential for very high costs for propane this winter, and there has been a dampening of attitude."

He also expects there will be drops in cash rents going into 2015 with a decrease of $33 per acre being forecast by the survey respondents.

"This softening in prices has been expected for some time and this is not a doom and gloom scenario," Aupperle warned. "Land prices are still in ranges that have never been seen before and mindful land owners and operators can still be profitable with the correct management programs in place. Some of survey respondents indicated a one-in-10 chance for large price declines over the next five years, but 31% expect that range to be only a negative 1% to 5% per year."

If interested in seeing a copy of LandOwner, just drop me an email at landowner@profarmer.com or call 800-772-0023.

 

Fed Banks Find Stable Farmland Values First-half 2014

Aug 14, 2014

Mike Walsten

Farmland values tended to stabilize the first half of 2014, following weakness at the start of the year, according to recent surveys conducted by the Federal Reserve Banks of Chicago and Kansas City. The exception is in the southern Corn Belt and Mid-South, where values are weaker. The Chicago Federal Reserve reports farmland values rose 2% during the second quarter of 2014. The result of that firming in values put the value of district farmland in the central Corn Belt at 3% higher than a year earlier.

The Kansas City Federal Reserve says the value of both dryland and irrigated cropland rose slightly less than 1% during the second quarter. That results in both categories of crop marking a 6% annual increase. The bright spot is ranchland values, which rose more than 2% in the second quarter across the Central and Southern Plains. On an annual basis, district ranchland values are up 9%.

The exception is the St. Louis Federal Reserve Bank, which indicates the value of farmland is down 6.7% from the high posted in the fourth quarter of 2013. Pastureland values are down 7.5% from fourth-quarter 2013, as well.

These surveys give land watchers a view of the pulse of land values through midyear. The rise in commodity prices this spring tended to support farmland prices, with the exception of the southern Corn Belt and Mid-South. Going forward demand will obviously be dampened by the low commodity prices but strong yield prospects will tend to soften the weakening in demand.

If interested in seeing a copy of LandOwner, just drop me an email at landowner@profarmer.com or call 800-772-0023.

 

USDA: U.S. Farmland Values Rise 8.1% Versus Year Earlier

Aug 01, 2014

Mike Walsten

The value of U.S. farmland rose 8.1% as of January 2014, according to USDA's Land Values Summary released this afternoon. The survey shows a land market that was still rising as of early 2014 before the reality of lower corn, soybean and wheat prices resulted in some weakening in land values this year.

USDA pegs the average value of an acre of U.S. farmland, including buildings as well as real estate, reached an average price of $2,950 an acre. The Northern Plains report the strongest increase with a 16.3% rise while the Southeast regions reports the smallest gain at just 1.1%. The highest farm real estate values are in the Corn Belt region at $6,370 per acre while the Mountain region had the lowest farm real estate value at $1,070 per acre.

The value of U. S. cropland rose by $290 per acre, 7.6%, to $4,100 per acre from the previous year. In the Northern Plains region, the average cropland value increased 13.6% from the previous year. However, in the Mountain region, cropland values decreased by 5.1%.

U.S. pasture values increased to $1,300 per acre, or 11.1%, above 2013. The Southeast region had the smallest percentage increase in pasture value, 0.5% above 2013. The Northern Plains had the highest increase at 26.5%.

If interested in seeing a copy of LandOwner, just drop me an email at landowner@profarmer.com or call 800-772-0023.

 

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