January 2019 Wallace’s Farmer “MarketPlace Extra”
Welcome to 2019 – it seems like we just turned the calendar to 2018, and yet here we are already welcoming another new year! As we enter 2019, it’s worth looking back over the 2018 crop year one last time. This past year enjoyed its share of challenges, including significant springtime snow in April that delayed planting season, too much rain in June, too little rain in July, too much rain again in October that delayed harvest season, rising interest rates, LOTS of trade conflicts, weakening commodity prices, and several actual damage-inflicting tornadoes thrown in between all this other action! Despite the challenges, strong corn and soybean yields in 2018 carried the majority of farming operations through another crop year, with most producers now having high expectations and anticipation for what’s to come in 2019.
Despite last year’s challenges, the farmland market in recent months has shown surprising resiliency and stability throughout the State of Iowa. Localized differences in crop yields played a role in land sale results this past fall, particularly in areas where another big crop was produced. Essentially, these big production areas ‘out-busheled’ the weakness in crop prices, per se. However, in localized areas where crop yields were average or below-average there was a more noticeable softness to the land market. Regardless of the area, high-quality farms with the most productive soils, solid drainage, easy farm-ability and strong fertility continue to sell best. And, despite some of the negative factors in the land market, farmers continue to pursue acquisition opportunities when they make sense to the core operation of their business.
There are a small handful of issues that continue to influence the Iowa farmland market. First, as mentioned above, last year’s crop production plays a 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, increasing interest rates will continue to pressure farmland values. As of this writing, the Federal Reserve is expected to again raise short-term rates at their December meeting, which follows a consistent pattern of bumping short-term rates since late 2016. While short-term rates don’t directly impact long-term borrowing costs, short-term rates directly impact farm operating notes, which are now squarely in focus as we are in operating loan renewal season. And, since early fall of 2018, long-term rates have also increased to multi-year highs. Third, the disruption in the commodity markets by the enactment of global trade tariffs is real and has softened US grain markets. Coming away from the G-20 Summit in Argentina, there was some expectation that cooler heads were going to prevail, and that stability may return to the global marketplace, particularly as it relates to the United States and China. Ultimately, 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, as mentioned last month, as we approach the 2019 growing season there will be a reset in crop insurance price levels for 2019. Where these revenue policy price levels will reset for 2019 production is important to producers. Finally, Senate and House negotiators have reportedly worked out a compromise on a new Farm Bill in the current lame-duck Congress. The details of any new Farm Bill policies will impact the countryside for the next several years. So, stay tuned for further analysis as new information surfaces on all these topics.
Buena Vista County:
80 +/- acres, located northwest of Albert City, recently sold at public auction for $8,500 per acre. The farm consisted of 79 +/- tillable acres with a CSR2 of 86.5, and equaled $99/CSR2 point on the tillable acres.
160 +/- acres, located near Woden, recently sold at public auction for $8,800 per acre. The farm consisted of 152 +/- tillable acres with a CSR2 of 80.5, and equaled $115/CSR2 point on the tillable acres. This farm also included 20,000 bushels of grain storage, a 36’ x 40’ machine shed, a steel Quonset building, and a small storage shed.
Black Hawk County:
39 +/- acres, located south of Jesup, recently sold at public auction for $7,200 per acre. The farm consisted of 38 +/- tillable acres with a CSR2 of 76.8, and equaled $96/CSR2 point on the tillable acres.
80 +/- acres, located east of Anthon, recently sold at public auction for $6,650 per acre. The farm consisted of 76 +/- tillable acres with a CSR2 of 72.3. The sale equaled $97/CSR2 point on the tillable acres.
120 +/- acres, located northeast of Madrid, recently sold at public auction for $8,650 per acre. The farm consisted of 116 +/- tillable acres with a CSR2 of 83.8. The sale equaled $107/CSR2 point on the tillable acres.
80 +/- acres, located northeast of Tipton, recently sold for $7,900 per acre. The farm consisted of 78 +/- tillable acres with a CSR2 of 79. The sale equaled $102/CSR2 point on the tillable acres.
169 +/- acres, located south of Clearfield, recently sold at public auction for $4,950 per acre. The farm consisted of 147 +/- tillable acres with a CSR2 of 71.1. The sale equaled $80/CSR2 point on the tillable acres.
122 +/- acres, located northeast of Macksburg, recently sold for $5,049 per acre. The farm consisted of 95 +/- tillable acres with a CSR2 of 65.1. The remaining acres were timber draws and waste. The sale equaled $99/CSR2 point on the tillable acres.
40 +/- acres, located north of Keota, recently sold at public auction for $7,750 per acre. The farm consisted of 40 +/- tillable acres with a CSR2 of 61.6, of which all the tillable acres were in CRP until 2020 with an annual payment of $7,344. The sale equaled $125/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.