May 2019 Wallace’s Farmer “MarketPlace Extra”
A long, cold, and wet winter is finally starting to give way to spring conditions. With the arrival of spring fieldwork and planting operations, we mark the beginning of another farmland sales season. It seems that the farmland market across Iowa sets a slightly new course each year, based in part on how things are going out in the fields. When things are running smooth and growing conditions are favorable, crop prospects are high, and optimism is easier to find. And because the farmland market is impacted by the confidence of those participating in the market, land prices seem to be stable to higher when things are going well. On the opposite end of that scale, the market can also become a bit shaky when things are not working quite as smoothly. As we move into springtime 2019, the Iowa farmland market is showing continued resilience and stability. Value differences still exist from neighborhood to neighborhood. Specifically, local growing conditions and local sale volumes influence the underlying value differences across the region. Regardless of where you are, high-quality farms with above-average soil types, adequate/good 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 still represent a very influential buying segment in most corners of Iowa.
As always, there are many factors that 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. Next, keep an eye on the level and direction of interest rates. Our current interest rate environment is a somewhat curious one. For the past 2+ years, the Federal Reserve has been inching short-term rates higher – a policy that in late 2018 was also beginning to have an impact on long-term rates. However, US and global economic growth started to wane in early 2019, and the Fed has outwardly signaled no rate increases for the remainder of 2019. This adjustment has impacted the bond markets, and long-term rates have actually fallen over the past 60 days, relative to short-term rates. In fact, long-term rates have fallen to the point where the yield curve has inverted (e.g., long-term rates lower than short-term rates). Unfortunately, an inversion of the yield-curve has in the past been a relatively strong indicator of forthcoming economic recession. So, where rates move for the remainder of 2019 will be worth watching. 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 has not been very positive lately. Enormous early-season expectations for 2019 corn acreage, as well as huge ending stocks for soybeans, have both been pressuring the corn and soybean markets. We’re still hoping for positive news coming from global trade negotiations, particularly with China. And for better or worse, the outcome of trade negotiations will continue to impact commodity prices and underlying asset values, including farmland. So, as we get deeper into the growing season, keep an eye on both the level and direction of commodity prices. There are sure to be other market-driving factors to emerge in mid-2019, so stay tuned for further analysis as new information surfaces on these, and other, topics.
105 +/- acres, located northeast of Larchwood, recently sold at public auction for $11,000 per acre. The farm consisted of 99 +/- tillable acres with a CSR2 of 67.9, and equaled $171/CSR2 point on the tillable acres. Also of note, this farm had an electric line and power poles running through the middle of the property.
78 +/- acres, located near Powersville, recently sold at public auction for $4,500 per acre. The farm consisted of 77 +/- tillable acres with a CSR2 of 72.1, and equaled $63/CSR2 point on the tillable acres.
100 +/- acres, located southeast of Fayette, recently sold at public auction for $7,700 per acre. The farm consisted of 100 +/- tillable acres with a CSR2 of 85.6, and equaled $90/CSR2 point on the tillable acres.
40 +/- acres, located south of Scranton, recently sold at public auction for $8,600 per acre. The farm consisted of 38 +/- tillable acres with a CSR2 of 84.8, and equaled $106/CSR2 point on the tillable acres.
160 +/- acres, located west of Lincoln, recently sold at public auction for $12,700 per acre. The farm consisted of 158 +/- tillable acres with a CSR2 of 91.6, and equaled $140/CSR2 point on the tillable acres.
215 +/- acres, located northwest of Walford, recently sold for $11,000 per acre. The farms consisted of 214 +/- tillable acres with a CSR2 of 89.2, and equaled $124/CSR2 point on the tillable acres.
37 +/- acres, located north of Bedford, recently sold at public auction for $3,600 per acre. The farm consisted of 33 +/- tillable acres with a CSR2 of 51.9, and equaled $78/CSR2 point on the tillable acres.
117 +/- acres, located northwest of Lorimor, recently sold for $6,100 per acre. The farm consisted of 109 +/- tillable acres with a CSR2 of 68.3, and equaled $96/CSR2 point on the tillable acres.
215 +/- acres, located west of Bloomfield, recently sold at public auction for $2,750 per acre. The farm consisted of 163 +/- tillable acres with a CSR2 of 39.2 and was being utilized as pasture. The sale also included a cattle barn and silo, and equaled $92/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.