The steep decline in commodity prices from the records set in 2012 are likely to result in more moderate decline in land rental rates, says agricultural economist Brent Gloy, a former Purdue professor. In his blog, Gloy compared the decline in rental rates and corn prices since 1976. “One might expect to see some declines in rents going forward, but changes in statewide averages of more than 5% would be large in the context of history. Observation would suggest that when rents decline substantially, it will take a period of years for them to work lower,” Gloy writes.
Of the three most widely grown crops, corn has seen the greatest drop in price over the past 12 months. The Agricultural Prices report says corn sold for an average $4.37 in June, compared to $6.97 the previous June. Soybeans were down $1, to $14.10 a bushel in June, and wheat was $6.61 a bushel, down 76 cents. Lower commodity prices are forecast to reduce farm income from this year’s crops.