Cropland values are steady or starting to erode while ranch and pasture land is rising in value, say agricultural bankers in the Midwest and central Plains. The situation mirrors the commodity outlook – crop prices are down sharply after setting records in 2012 while livestock producers sell cattle and hogs for the highest prices in years.
“Indeed, farmland values may have already plateaued,” said the Chicago Federal Reserve Bank in its AgLetter. Thirty percent of bankers who took part in a survey said they anticipate land values to fall in the July 1-Sept 30 period and 68 expect them to hold steady. “As a whole, the survey results indicated weakness in agricultural land values in the coming quarters.” Land values fell by 1 percent in Indiana during the second quarter and were flat in Michigan during the second quarter. High dairy prices helped propel land values by 6 percent in Wisconsin.
The St Louis Federal Reserve Bank said farmland values fell in the Mid-South and lower Midwest during the second quarter; cropland by 0.42 percent and ranchland by 7.4 percent. “Lenders reported they expect prices for quality farmland to continue to decline in the third quarter, relative to the same period a year earlier, but they expect ranch and pastureland prices to rise slightly.”
“Despite lower farm income, cropland values generally held steady in the second quarter,” said the Kansas City Federal Reserve Bank in a report on the Central Plains. Cropland values rose by less than 1 percent from April 1-June 30 while ranchland was up 2 percent and still rising, “supported by demand from the livestock sector for high-quality pastures.” Colorado and northern New Mexico showed the largest gains “due in part to land lease revenues from energy production and easing drought conditions.”