June 2019 Wallace’s Farmer “MarketPlace Extra”
It has been a somewhat uneven start to the 2019 crop year. Cold, wet planting conditions persisted well into the month of May, and hampered progress across the entire Midwest. That being said, farmland prices appeared largely stable as we entered planting season. Good farms – those with above average soil types, adequate drainage, easy farm-ability, and well-managed fertility levels – continue to sell best. Farmers are still buying nearly 8 out of every 10 farms brought to the market, although non-farming investors have been quite active and represent a very influential buying segment in most corners of Iowa for quality row-crop farms.
As I have shared in this column before, the farmland market reflects the collective confidence of all those participants in the market. When things are going well, farmland values tend to be stable to higher; while weakness in land values shows up when things are not working quite as smoothly. Locally speaking, there are always value differences when comparing one specific neighborhood to another. These neighborhood factors include localized growing conditions and local sale volumes, just to mention a couple.
As always, there are also many factors that more broadly influence current land sales and land values. First, as mentioned above, the success (or struggle) of the current growing season will play an important role in current and upcoming land sales. At this point of 2019, the jury is still out, but it’s fair to say that planting season has not been as smooth a process as compared to recent years. Next, the level and direction of interest rate movements broadly impacts the land market. Our current interest rate environment, particularly for long-term rate products, seems to have stabilized, with interest rate levels not significantly higher than 2018. However, short-term rate products (e.g., operating notes) for 2019 were reset to noticeably higher levels, making for slightly tighter cash-flow budgets again in 2019. It will be worth watching where rates move for the remainder of 2019. Third, commodity markets are a major influencer in actual farm profitability, as well as the collective confidence/psyche of the Midwestern land market – and the mood in the grains complex has not been very positive lately. Enormous early-season expectations for 2019 crops, coupled with huge ending stocks and an uncertain global trade situation, are pressuring the corn and soybean markets. We maintain a hopeful and positive attitude regarding global trade negotiations, but it is, again, fair to say that many across the business ag sector are becoming fatigued – and the resulting pressures are real. The outcome of these trade negotiations will absolutely impact commodity prices and underlying asset values, including farmland. As we get deeper into the growing season, keep an eye on all these factors, as they are sure to impact the land market in your corner of the world. And, stay tuned for further analysis as new information surfaces on these, and other, topics.
67 +/- acres, located west of Rock Valley, recently sold at public auction for $13,150 per acre. The farm consisted of 66 +/- tillable acres with a CSR2 of 65.4, and equaled $204/CSR2 point on the tillable acres. Of note, this farm was classified as HEL, and had hog and/or cattle manure applied annually in recent years.
50 +/- acres, located near Charles City, recently sold at public auction for $7,825 per acre. The farm consisted of 49 +/- tillable acres with a CSR2 of 87.5, and equaled $91/CSR2 point on the tillable acres.
Black Hawk County:
55 +/- acres, located within the city limits of Waterloo, recently sold for $9,004 per acre. The farm consisted of 53 +/- tillable acres with a CSR2 of 67.5, and equaled $138/CSR2 point on the tillable acres. This land was divided into two pieces by US Highway 20, which runs through the farm at an angle.
38 +/- acres, located east of Coon Rapids, recently sold for $8,935 per acre. The farm consisted of 38 +/- tillable acres with a CSR2 of 81.6, and equaled $110/CSR2 point on the tillable acres.
57 +/- acres, located northeast of Ogden, recently sold at public auction for $8,050 per acre. The farm consisted of 56 +/- tillable acres with a CSR2 of 83.2, and equaled $99/CSR2 point on the tillable acres.
77 +/- acres, located west of West Liberty, recently sold for $8,650 per acre. The farms consisted of 77 +/- tillable acres with a CSR2 of 78.6, and equaled $110/CSR2 point on the tillable acres.
155 +/- acres, located south of Shenandoah, recently sold at public auction for $4,885 per acre. The farm consisted of 154 +/- tillable acres with a CSR2 of 65.9, and equaled $75/CSR2 point on the tillable acres.
95 +/- acres, located on the southeast edge of Knoxville, recently sold at public auction for $8,450 per acre. The farm consisted of 89 +/- tillable acres with a CSR2 of 80.3, and equaled $112/CSR2 point on the tillable acres.
90 +/- acres, located west of Packwood, recently sold at public auction for $7,300 per acre. The farm consisted of 84 +/- tillable acres with a CSR2 of 74.5, and equaled $105/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.