November 2020 Wallace’s Farmer “MarketPlace Extra”
As fall approaches every year, it is common to see a handful of public farmland sales occur just before harvest, typically during September. The thinking is that the crop is largely “made” by September 1st, but because harvest is not yet in full swing, farmers and investors will be available to attend pre-harvest auctions. Just as important as their schedule availability, by this time prospective buyers will also have a reasonable idea what’s out in the fields to be harvested, so it is believed they’ll have the confidence to bid and make intelligent buying decisions at pre-harvest sales. The outcome of these early season sales can often set the tone for the balance of the fall and wintertime sales season.
Some thought this year might be different, because as we all are painfully aware, 2020 has been a year unlike any other. Since mid-March, COVID-19 concerns have disrupted nearly every aspect of society. Then, an early season drought that was initially focused on western Iowa eventually expanded to include most of the State as we entered August. Later, in mid-August, ferocious straight-line winds from a complex storm system that most of us had never heard of – a derecho – decimated tens of millions of acres in a prime crop growing region of Iowa, centered on either side of U.S. Highway 30. And I have not even mentioned the frequency of all the negative political ads that started months ago, and the potential implications from the election outcome. Put it all together, and no-one would believe this would be a formula for a stable to stronger farmland market. But guess what? It appears that a stable-to-stronger farmland market is exactly what we are seeing.
If you can somehow cut through all the motion and noise coming from the challenges of 2020, you will find that the fundamental drivers of the farmland market have trended positively, at just the right time. Specifically, the commodity markets have rallied significantly since mid-August, based both on huge late summer export sales as well as USDA report adjustments that the grain complex viewed as bullish. Second, long-term interest rates remain at unprecedented rock-bottom levels, which I believe is a significant driver-motivator for both farmers and farmland investors. Next, the U.S. government continues to inject enormous financial support to the ag industry, which is boosting the countryside. If you think back, agriculture has enjoyed an alphabet soup of direct government programs in the past 12-24 months (MFPs, CFAPs, etc.). The cash-flows from this continued gov’t support is important to farmers who may be buyers, but it also has a direct effect of buoying next year’s land rental market, thereby positively impacting farmland investors who buy and rent farms to local farm operators. Finally, when measured against historical norms, there are very few farms that are publicly available to buy. This “low-inventory” reality, especially when coupled with stronger grain prices and uber-low interest rates, creates a competitive sales environment. The sales noted below are a testament to the competitive Iowa farmland market, and these early fall sales have set the tone for the land market as we enter the winter sales season.
73 +/- acres, located southwest of Hanover, recently sold at public auction for $10,300 per acre. The farm consisted of 69 +/- tillable acres with a CSR2 of 93.2, and equaled $117/CSR2 point on the tillable acres.
40 +/- acres, located near Kanawha, recently sold at public auction for $10,350 per acre. The farm consisted of 39 +/- tillable acres with a CSR2 of 87.7, and equaled $121/CSR2 point on the tillable acres.
74 +/- acres, located west of Lamont, recently sold for $9,800 per acre. The farm consisted of 74 +/- tillable acres with a CSR2 of 81.9, and equaled $120/CSR2 point on the tillable acres.
197 +/- acres, located northeast of Missouri Valley, recently sold at public auction for $5,800 per acre. The farm consisted of 174 +/- tillable acres with a CSR2 of 51.9, and equaled $126/CSR2 point on the tillable acres.
303 +/- acres, located northwest of Adel, recently sold at public auction for $12,000 per acre. The farm consisted of 302 +/- tillable acres with a CSR2 of 88.4, and equaled $136/CSR2 point on the tillable acres.
310 +/- acres, located north of West Branch, recently sold for $7,500 per acre. The farm consisted of 275 +/- tillable acres with a CSR2 of 77.9, and equaled $108/CSR2 point on the tillable acres. The balance of the farm was in waterways/hay ground.
40 +/- acres, located near Massena, recently sold at public auction for $7,020 per acre. The farm consisted of 38 +/- tillable acres with a CSR2 of 66.6, and equaled $111/CSR2 point on the tillable acres.
80 +/- acres, located south of Creston, recently sold at public auction for $6,200 per acre. The farm consisted of 68 +/- tillable acres with a CSR2 of 71.4, and equaled $102/CSR2 point on the tillable acres.
80 +/- acres, located north of Ottumwa, recently sold at online auction for $10,200 per acre. The farm consisted of 80 +/- tillable acres, with a CSR2 of 85.8, and equaled $119/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.