Pasture Prices on the Rise

 
Pasture Prices on the Rise

Farmland prices have likely hit their peak, but expect cattle and pasture prices to continue upward.

That was the message from Ron Plain, University of Missouri Extension agricultural economist, at the 2014 Missouri Livestock Symposium in Kirksville, Mo., in mid-December.

Plain says farmland prices depend on interest rates and returns generated by the land. Interest rates are steady, but returns per acre have declined as crop prices have dropped.

“Cropland is probably as high as it’s going to go for now,” Plain says. “For cropland prices, the peak is here because we’ve cut corn and soybean prices in half.”

But pastureland prices, which depend on cattle prices and how much cattlemen are earning, continue to increase.

“We had record prices for cattle in 2014, but we are expecting higher prices for 2015, so expect both cash rent and sale prices for pastureland to be higher in 2015,” Plain says. “As far as the peak in cattle prices, maybe 2016, and the peak in pastureland could be 2016 or 2017.”

However, any change in weather could postpone that peak. Dry conditions reducing grass production could keep cattle prices high. Plain says a drought would cause producers to sell more heifers and cows, further delaying an increase in the cattle herd.

“For cattle, it’s nine months for gestation; they have one calf at a time and then a year and a half to two years to raise the calf. A nearly three-year production cycle makes for slow change,” he says.

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