May 2020 Wallace’s Farmer “MarketPlace Extra”
Unbelievable! This is the only word I know that adequately explains the past 4-6 weeks. While I did mention the spread of the Coronavirus in last month’s article, no one saw the immense global impact of the virus, in advance. While the prognosticators are now lining up to offer their predictions for coming months, no one really knows how long or how deep the impact will be felt, - both across the health care system as well as throughout the domestic (and global) economy. In my mind, beyond the legitimate health concerns, the biggest impact to our way of life may be rooted in the word “confidence”. Is it now safe to go to the store for groceries and supplies? Can kids and staff safely return to schools? When will worship at local churches return to some semblance of normal? Is now the time to buy into the stock market? Should I buy a farm? It all runs on confidence!
Oh, and did you notice that in the midst of all this COVID-19 confusion, spring actually arrived in the Midwest? Lots of fieldwork has been occurring. With ugly memories from last year’s growing season struggles still fresh in our minds, planters are now racing to get it all done in a timely manner. And we thought 2019 was a tough year – geeeessshhh!
As it relates to land values, we all know there’s a lot of motion in the marketplace right now. So, let’s dial in and review the fundamentals. Interest rates have fallen again and are currently at incredibly low levels –this reality is supportive to farmland values. Going into spring, farmland sales volume was slowing with the normal change in marketplace focus that occurs every year during planting season. When you couple the seasonal slowdown with the added uncertainty stemming from the Corona-crisis, I expect sales volume to dip even a bit more. This potential volume drop should also be supportive to farmland values. Recent demand destruction for both corn and soybeans has been real, which has hurt commodity prices. Less valuable on-farm production is not supportive for farmland values, of course. Having said that, however, I am a little surprised at the resiliency of commodity prices in the wake of both the tariff situation and the more recent drop in demand caused by weak oil/weak ethanol. Finally, the desire by investors to own Midwestern farmland remains real. Coming out of this time of mostly negative volatility in alternative investments (e.g., stocks, bonds, REITs, etc.), I believe there is potential to see a bump in investor desire to own farmland. Stable, annual rental income streams coupled with a history of long-term appreciation, is attractive when compared to the wheels that are coming off other vehicles. Even if values fluctuate, the asset is real and won’t just vanish.
All things told, we have lots of opposing factors in play, simultaneously. There is much we don’t yet know about the virus situation or the current 2020 growing season. But I would characterize the fundamentals of the Midwestern farmland market as being stable and generally favorable. As you will see in a sampling of sales from the past 4 to 6 weeks, the Iowa farmland market has essentially continued to operate smoothly, even with the various limitations created by COVID-19.
70 +/- acres, located northeast of Fonda, recently sold at public auction for $8,300 per acre. The farm consisted of 68 +/- tillable acres with a CSR2 of 87.4, and equaled $98/CSR2 point on the tillable acres.
152 +/- acres, located near Latimer, recently sold at public auction for $7,925 per acre. The farm consisted of 149 +/- tillable acres with a CSR2 of 85.6, and equaled $94/CSR2 point on the tillable acres.
Black Hawk County:
80 +/- acres, located west of Hudson, recently sold for $9,881 per acre. The farm consisted of 77 +/- tillable acres with a CSR2 of 88.7, and equaled $116/CSR2 point on the tillable acres.
160 +/- acres, located southwest of Anthon, recently sold at public auction for $7,300 per acre. The farm consisted of 152 +/- tillable acres with a CSR2 of 55.0, and equaled $140/CSR2 point on the tillable acres.
75 +/- acres, located northeast of Panora, recently sold at public auction for $9,100 per acre. The farm consisted of 75 +/- tillable acres with a CSR2 of 87.9, and equaled $104/CSR2 point on the tillable acres.
124 +/- acres, located southwest of Walford, recently sold for $6,492 per acre. The farm consisted of 108 +/- tillable acres with a CSR2 of 71.6, and equaled $104/CSR2 point on the tillable acres.
77 +/- acres, located south of Wales, recently sold at public auction for $5,200 per acre. The farm consisted of 62 +/- tillable acres with a CSR2 of 77.7, and equaled $83/CSR2 point on the tillable acres.
375 +/- acres, located southwest of Lovilia, recently sold for $2,900 per acre. The farm consisted of 231 +/- tillable acres currently being utilized as improved pasture, with the balance of the property in ponds, wooded draws and timber.
Des Moines County:
106 +/- acres, located north of Burlington, recently sold at public auction for $8,100 per acre. The farm consisted of 105 +/- tillable acres with a CSR2 of 74.7, and equaled $110/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.