July 2020 Wallace’s Farmer “MarketPlace Extra”
As we look back on the first six months of the 2020 calendar year, I think it is safe to say that the year (thus far!) has been unlike any in our lifetime. For agriculture specifically, a new decade that started with cautious optimism because of late 2019 passage of the USMCA (e.g., new NAFTA) and the Phase 1 China trade deal coming together, quickly turned sour with the March arrival of the Coronavirus pandemic here in the United States. Massive demand destruction occurred this spring for row-crop commodity products and the virus completely re-routed the entire supply chain and otherwise threw the livestock sector into disarray as numerous packing plants and other food processing facilities were temporarily shuttered. Make no mistake, markets have been rocked.
Despite all this, the world has continued to turn. And, as of this writing the world we generally knew pre-COVID, is beginning to come alive again. Here in Iowa, we’ve also enjoyed a mostly smooth and speedy spring planting season, and the crops are now beginning to stretch their legs with adequate moisture and recent heat. In addition, livestock processing facilities have re-opened and are beginning to ramp up capacity again. While we are not back to normal, things are trending in a positive direction.
As is typical, over the past 90 days I’ve regularly polled several farmers, as well as different members of our professional field staff of farmland brokers, auctioneers, farm managers, and farm appraisers who are scattered and involved in several states throughout the Midwest. My discussions often dial-in on attitudes and appetites for new farmland projects. This helps me maintain a sense of the ‘mood’ of the farmland market. Most of the folks I’ve talked to believe the demand lost – for corn, ethanol, soybeans, livestock, etc. – over the past three months is forever gone and will not be recaptured. But, as we fully open things back up, demand and use will increase again. All believe it may take some time to reach the consumption levels we were running at in February. But long-term there is optimism. I’ve found farmer attitudes, in particular, to be very correlated with how much old crop inventory they still have unpriced or in the bin. For those who were mostly sold before spring planting, things look more favorable, while not-so-much if you are the other-way-around.
Surprising to some, is that the farmland market as reflected by land values, has kept its legs under it through most of the past three to four months. Yes, the number of sales occurring this spring has been down market wide. Periods of great uncertainty will do that to a market. But the fact that sales volume was down has seemed to support the sales that are occurring. Commodity prices remain weak, but interest rates are rock bottom attractive, government support has been significant, and the crop year has been quick out of the starting blocks. So, if commodity prices stay down, this may be another year where the Iowa countryside attempts to ‘out-bushel’ the weak prices again, which will translate into a very localized marketplace this fall. So, stay tuned. In the meantime, these recent land sales tell me that it’s not bad news everywhere.
110 +/- acres, located southwest of Remsen, recently sold at public auction for $9,600 per acre. The farm consisted of 107 +/- tillable acres with a CSR2 of 86.2, and equaled $115/CSR2 point on the tillable acres. This farm was classified at HEL and had 35-40 acres of hog manure applied at no cost to the buyer.
106 +/- acres, located near the Iowa-Minnesota border near Elmore, MN, recently sold for $7,475 per acre. The farm consisted of 103 +/- tillable acres with a CSR2 of 82.6, and equaled $93/CSR2 point on the tillable acres.
116 +/- acres, located northeast of New Hampton, recently sold for $8,500 per acre. The farm consisted of 116 +/- tillable acres with a CSR2 of 80.7, and equaled $105/CSR2 point on the tillable acres.
192 +/- acres, located southwest of Rockwell City, recently sold for $8,977 per acre. The farm consisted of 179 +/- tillable acres with a CSR2 of 87.6, and equaled $110/CSR2 point on the tillable acres. A drainage ditch divided this farm into 2 parcels.
142 +/- acres, located east of Garden City, recently sold at public auction for $6,950 per acre. The farm consisted of 136 +/- tillable acres with a CSR2 of 83.1, and equaled $87/CSR2 point on the tillable acres. A creek divided this farm into 2 parcels, and this farm was also sold with a lease in place for the 2020 crop year.
77 +/- acres, located west of Mechanicsville, recently sold for $11,500 per acre. The farm consisted of 77 +/- tillable acres with a CSR2 of 91.9, and equaled $125/CSR2 point on the tillable acres.
225 +/- acres, located east of Hamburg, recently sold for $7,626 per acre. The farm consisted of 210 +/- tillable acres with a CSR2 of 69.0, and equaled $118/CSR2 point on the tillable acres.
47 +/- acres, located north of Patterson, recently sold for $6,066 per acre. The farm consisted of 46 +/- tillable acres with a CSR2 of 76.6, and equaled $81/CSR2 point on the tillable acres.
84 +/- acres, located north of Fairfield, recently sold for $3,929 per acre. The farm consisted of 64 +/- tillable acres, of which 57 +/- acres were enrolled in CRP contracts. The tillable acres have a CSR2 of 62.6, and the sale equaled $82/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.