February 2024 Wallace’s Farmer MarketPlace Extra

Clues from the Market – #1 Commodity Prices

I get the chance to speak to many groups about farmland, and each time, I am asked about what drives the land market. There are many underlying factors that can impact land values from area-to-area, including special uses and development factors.  But, in truly rural areas, I tend to focus on 5 primary drivers – 1) commodity prices, 2) interest rates, 3) input prices, 4) land sale volume, and 5) local historical wealth. In each instance, both the current level(s), and any recent direction of movement for the factor, can matter. For the next several months in this column, I’d like to comment more directly on each of these factors.

Commodity prices are the single biggest factor with influence on the land market. Strong grain prices lead to on-farm profits and demand for more land; weak prices lead to soft (or no) profits and a shaky land market. Because farmers buy 7 of 10 farms that get sold, any weakness in commodity prices will eventually be reflected in underlying land prices. It can often take the land market several months to adjust to lower grain prices, although in areas with weak production, it can happen more quickly. Based on the sales below, there has been enough profit created, with still strong liquidity, to power very competitive land purchases statewide.

NORTHWEST

Buena Vista County:

116 +/- acres, located north of Alta, recently sold at public auction for $13,550 per acre. The farm consisted of 107 +/- tillable acres with a CSR2 of 90.0, and equaled $163/CSR2 point on the tillable acres.

NORTH CENTRAL

Mitchell County:

232 +/- acres, located near Orchard, recently sold at public auction for $15,200 per acre. The total farm consisted of 226 +/- tillable acres with a CSR2 of 88.6, and equaled $176/CSR2 point on the tillable acres.

NORTHEAST

Delaware County:

80 +/- acres, located west of Hopkinton, recently sold at public auction for $16,000 per acre. The farm consisted of 75 +/- tillable acres with a CSR2 of 86.6, and equaled $197/CSR2 point on the tillable acres.

WEST CENTRAL

Woodbury County:

133 +/- acres, located southwest of Cushing, recently sold at public auction for $11,200 per acre. The farm consisted of 130 +/- tillable acres with a CSR2 of 64.6, and equaled $177/CSR2 point on the tillable acres.

CENTRAL

Story County:

77 +/- acres, located southeast of Roland, recently sold at public auction for $13,400 per acre. The farm consisted of 77 +/- tillable acres with a CSR2 of 81.9, and equaled $163/CSR2 point on the tillable acres.

EAST CENTRAL

Clinton County:

40 +/- acres, located north of Lost Nation, recently sold for $18,200 per acre. The farm consisted of 39 +/- tillable acres with a CSR2 of 86.8, and equaled $215/CSR2 point on the tillable acres.

SOUTHWEST

Adams County:

40 +/- acres, located northeast of Lenox, recently sold at public auction for $15,500 per acre. The farm consisted of 37 +/- tillable acres, with a CSR2 of 82.8, and equaled $202/CSR2 point on the tillable acres.

SOUTH CENTRAL

Warren County:

86 +/- acres, located east of New Virginia, recently sold at public auction for $9,900 per acre. The farm consisted of 78 +/- tillable acres with a CSR2 of 58.6, and equaled $186/CSR2 point on the tillable acres.

SOUTHEAST

Mahaska County:

140 +/- acres, located east of New Sharon, recently sold at public auction for $7,000 per acre. The farm consisted of 104 +/- tillable acres with a CSR2 of 62.8, and equaled $150/CSR2 point on the tillable acres. The balance of the farm was timber and wooded draws.

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. 

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