MetLife Agricultural Finance says low corn and soybean prices are constraining farm income and will lead to the “first significant correction” in farmland values since the agricultural recession of the mid-1980s, reported Agrimoney. The lender forecast land prices to fall 20 percent by 2018 from their recent peak.
“Declining cash receipts will lead to a reduction in inflation-adjusted farmland values by 2018, representing the first significant correction since the mid-1980s,” said MetLife. Commodity prices are expected to improve after 2018 so there may be a 6-percent rebound in land prices by 2020. The lender’s estimate of the size of the decline is larger than reported so far by farm bankers.
Land values crashed 42 percent in the mid-1980s with the end of an export boom, a surge in inflation and sharply higher interest rates. MetLife said conditions are far different for the current adjustment in land prices, which it called a “moderate repricing … better aligning farmland values with cash receipt expectations.”