February 2019 Wallace’s Farmer “MarketPlace Extra”

Although land value differences exist across various neighborhoods throughout the State of Iowa,the Iowa farmland market continues to show somewhat surprising resiliency and stability. These differences seem to be most pronounced in those areas where either strong crop yields have occurred (e.g., market being stronger) or poor crop yields have occurred (e.g., market being weaker).  Regardless of the area, high-quality farms continue to sell best.  These better-quality farms often feature qualities including above-average soils, good drainage, easy farm-ability, and well-managed fertility levels.  Farmers continue to pursue acquisition opportunities when they make sense to the core operation of their farming business.  And likewise, non-farming investors remain active in most corners of the Iowa market.

As we approach the 2019 crop year, several issues will remain an important influence over the marketplace.  First, the success (or lack thereof) of crop production in recent years plays an important role in current land sales – typically, the more bushels grown in an area, the more competitive most land sales in that area prove to be.  Second, keep an eye on the level and direction of interest rates.  Any meaningfully increase in long-term rates during 2019 will add pressure to farmland values.  The Federal Reserve again raised short-term rates at their December 2018 meeting, which followed a consistent pattern of bumping short-term rates over the past two to three years.  While short-term rates don’t directly impact long-term borrowing costs, short-term rates directly impact farm operating notes, which increases the cost structure for current farm operations.  Third, commodity markets continue to be disrupted by the enactment of the global trade tariffs that have softened US grain markets. If the US and China can settle some differences before a self-imposed March deadline, the grain markets are likely to react positively… and if not, it is possible that the failure to do so will add bearish pressure to an already shaky grain complex.  As previously stated in this column, how global trade negotiations play out in the weeks and months ahead will continue to impact commodity prices, market confidence, and underlying asset values, including farmland. Fourth, the reset in crop insurance price levels for 2019 production will be important in the coming months, as will the implementation of the new Farm Bill.  By and large, the recently passed legislation maintains similar program support that Midwestern farm operations enjoyed in 2018, with even a bit more flexibility for coming years.  Stay tuned for further analysis as new information surfaces on all these topics.

NORTHWEST

Pocahontas County:

70 +/- acres, located southwest of Pocahontas, recently sold at public auction for $8,675 per acre. The farm consisted of 66 +/- tillable acres with a CSR2 of 84.2, and equaled $109/CSR2 point on the tillable acres.

NORTH CENTRAL

Cerro Gordo County:

155 +/- acres, located south of Mason City, recently sold at a sealed bid auction for $10,000 per acre. The farm consisted of 152 +/- tillable acres with a CSR2 of 89.1, and equaled $114/CSR2 point on the tillable acres.

NORTHEAST

Black Hawk County:

154 +/- acres, located east of Waterloo, recently sold privately for $8,930 per acre. The farm consisted of 149 +/- tillable acres with a CSR2 of 88, and equaled $105/CSR2 point on the tillable acres.

WEST CENTRAL

Ida County:

119 +/- acres, located northwest of Battle Creek, recently sold at public auction for $7,200 per acre. The farm consisted of 115 +/- tillable acres with a CSR2 of 62.3. The sale equaled $120/CSR2 point on the tillable acres.

CENTRAL

Poweshiek County:

160 +/- acres, located southeast of Grinnell, recently sold at public auction for $9,350 per acre. The farm consisted of 155 +/- tillable acres with a CSR2 of 82.3. The sale equaled $117/CSR2 point on the tillable acres.

EAST CENTRAL

Benton County:

155 +/- acres, located north of Keystone, recently sold for $9,200 per acre. The farm consisted of 147 +/- tillable acres with a CSR2 of 87.6. The sale equaled $110/CSR2 point on the tillable acres.  This land also included a small grain bin.

SOUTHWEST

Mills County:

116 +/- acres, located south of Emerson, recently sold at public auction for $6,250 per acre. The farm consisted of 112 +/- tillable acres with a CSR2 of 72.4. The sale equaled $89/CSR2 point on the tillable acres.

SOUTH CENTRAL

Monroe County:                                                                           

77 +/- acres, located north of Albia, recently sold at public auction for $6,800 per acre. The farm consisted of 73 +/- tillable acres with a CSR2 of 84.3. The sale equaled $86/CSR2 point on the tillable acres.

SOUTHEAST

Wapello County:

76 +/- acres, located southeast of Hedrick, recently sold at public auction for $7,300 per acre. The farm consisted of 71 +/- tillable acres with a CSR2 of 78.1. The sale equaled $100/CSR2 point on the tillable acres. 

Hertz Real Estate Services compiled this list, but not all sales were handled by Hertz. Call Hertz at 515-382-1500/800-593-5263 or visit www.Hertz.ag.