Lower crop returns will pressure farmland market, say analysts
The boom in corn and soybean prices since 2020 is fading away, with lower farm income likely in the near term, wrote three agricultural economists in the farmdoc daily blog. “Returns to farming have declined, suggesting that cash rents should decline as well. How quickly or how much cash rents decline will depend on how far commodity prices fall as well as potential policy responses to those declines,” they said.
Farmland values plateau with occasional declines
High interest rates and lower commodity prices are front-of-mind factors for farmland buyers, said Farmers National Co., a large farm management and real estate company. "Despite these negative pressures, the land market has remained relatively resilient but shows signs of settling in general, including single-digit decreases in specific areas," said Paul Schadegg, senior vice president.
Solar, other energy production emerging as pillar for farmland values, says Purdue
Farmers are beginning to regard energy production on their land, such as solar, wind, and carbon capture usage, as a factor in driving land values upward, said a Purdue University survey on Tuesday. The survey also found more farmers are exploring leases for solar production, and that lease rates are going higher and higher.
Interest rates rise faster than farmland values, says economist
For the first time since 2001, interest rates are rising faster than farmland values, creating a potential obstacle to land purchasers, said assistant economist Ty Kreitman of the Kansas City Federal Reserve Bank. “With interest costs now above average land value appreciation, farm operating profits will determine the magnitude of returns for financed land,” he said.
As inflation falls, ‘backwards pressure’ on food prices, analyst says
Compared to food price inflation of 11 percent in 2022, grocery price increases will be virtually nonexistent this year, said a Wells Fargo analyst Wednesday during a panel discussion on the 2024 outlook for the food and ag sector. A Rabobank analyst said that softer commodity prices would take the steam out of the hot farmland market.
Some signs of softening farmland values, says Fed economist
Although farmland values are strong, some ag bankers report a downturn in prices in the central Plains after a three-year run-up in values, said senior economist Cortney Cowley of the Kansas City Federal Reserve on Wednesday. The majority of bankers, however, expect farmland values to hold steady or increase moderately.
Cropland values soar 33 percent in three years
After years of stagnation, cropland values rose an average of $1,300 an acre in the three years since the pandemic hit the United States, according to the Agriculture Department. Values mushroomed 33 percent at the same time farmers enjoyed back to back years of record-high farm income, with income forecast to be the third-highest this year.
Farmers face sharply higher interest rates on loans
The financial outlook for many farmers is favorable, thanks to high commodity prices, but higher interest rates are an ongoing concern, according to ag bankers surveyed by the Federal Reserve. Interest rates on loans to farmers were 3.5 to 4.5 percentage points higher in the opening months of this year than they were at the end of 2021.
Iowa farmland values skyrocket, again
High commodity prices and low interest rates helped drive farmland values in Iowa to an average of $11,411 an acre, up 17 percent from 2021, when they rose 29 percent, said Iowa State University’s annual Land Value Survey.
As farmland values soar, so do fears of a price bubble
Flush with cash, farmers and investors have driven up farmland values this year at breathtaking rates — a 12 percent gain nationwide and more than 20 percent in three Farm Belt states. “Given recent experiences with fluctuations in the broader economy and prior farmland price dynamics, many market participants express concern that the rapid increase in farmland prices is a signal of a speculative bubble,” said three economists.
Farmland values rise alongside strong ag economy
Persistently strong commodity prices in the opening months of the year fueled a sharp growth in farmland values throughout the Midwest and Plains, said a Federal Reserve report on Thursday.
Biggest rise in Midwest land values in over a decade
Agricultural bankers reported a 22 percent increase in farmland values in the central Corn Belt during 2021, and they expect values to continue to rise in the opening months of this year, said the Chicago Federal Reserve Bank on Thursday.
Iowa farmland value zoomed by 29 percent this year
Farmland in Iowa is worth an average $9,751 an acre – the highest value since Iowa State University began the annual survey in 1941. Values skyrocketed by 29 percent this year, fueled by high commodity prices, better than expected crop yields and large pandemic relief payments, said associate professor Wendong Zhang.
Highest U.S. farm income in eight years, but headwinds in 2022
Despite the disruptions of the pandemic, U.S. farm income, a broad measure of profits, will be the highest since 2013, thanks to strong corn, soybean, wheat, broiler, cattle, and hog prices this year, said the USDA on Wednesday. "It is primarily a price story," said USDA economist Carrie Litkowski.
Cropland values soar by 15 percent in Midwest and Plains
High commodity prices and low interest rates fueled a sharp 15 percent increase in the value of cropland in the Midwest and Plains in the third quarter, according to surveys of ag bankers by four regional Federal Reserve banks. "Alongside prospects for further strength in commodity markets, the outlook for farm finances and agricultural land values through the end of 2021 remained strong," said a summary of the surveys.
Farmland values soar despite pandemic
Fueled by strong commodity prices and continued pandemic assistance, farmland values are skyrocketing, up by 14 percent in the central Midwest and by 10 percent in the central Plains, said the Federal Reserve banks in Chicago and Kansas City on Thursday.
Shield farmers from higher taxes for Biden projects, says House ag chair
The Biden administration could "impose a significant financial burden" on farm families with its proposal for stricter application of capital gains taxes, said House Agriculture chairman David Scott on Wednesday. Scott also said any increase in estate taxes "for those taking over farmland is untenable."
Farmland prices rise by up to 15 percent in hot market
With cash in their wallets, farmers are joining a throng of bidders that includes investors to drive up prices for farmland, said the largest U.S. farm management and real estate company on Tuesday. "Farmland sales prices are up by 5 to 15 perent in the past six months with most of the increase coming since the first of the year," said Randy Dickhut of Farmers National Co., based in Omaha.
Farm income improves significantly, say ag bankers
Heartened by sharp increases in commodity prices, farmers and ranchers across the Midwest and Plains are paying off bank loans and opening their wallets for big-ticket purchases, said a report from the Federal Reserve on Wednesday.