October 2018 Wallace’s Farmer “MarketPlace Extra”
The 2018 version of the fall harvest season is continuing across the State of Iowa. A more complete accounting of yield results will soon be reported. Despite widespread early season struggles, as we approached fall harvest, expectations were high for prospective yields totals. Time will tell if pre-harvest expectations were met, or not, and the answer to that question will likely to show up to impact the land market this season.
Because of localized differences in growing season success, don’t be surprised if local influences play a slightly larger role in sale results this fall. Early season sales are already reflecting this trend. In areas where another big crop is produced, we expect to see continued market stability, even in the face of lower grain prices. In other areas where crop yields are disappointing, however, there is the real potential for localized softness. High quality farms with the most productive soils, solid drainage, easy farm-ability and strong fertility will continue to sell best. Farmers continue to be the most prevalent group of buyers, even though non-farming investors are active across Iowa. Again, it should not surprise anyone if there is an increase in uneven sale results – for similar quality farms – that are in different areas, as we expect local factors to potentially play an increasing role in our market in the coming months.
To better understand the land market, maintain a focus on a handful of key issues: First, as was described above, production success/disappointment from area to area sets the mood in the countryside every year. Second, increasing interest rates will continue to pressure farmland values. The Federal Reserve has made it clear that they intend to continue raising short term rates in the next 6-12 months. And while short-term rates don’t directly impact long-term borrowing costs, short-term rates directly impact farm operating notes, which will definitely be in focus as we approach loan renewal season near year-end. And, beyond operating rates creeping up, we anticipate that long-term rates will continue creeping upward in the coming months, as well. Third, the disruption created in the commodity markets by the enactment of global trade tariffs is real, and has softened markets, particularly for soybeans. The emergency aid package offered through USDA is likely to blunt the cash-on-cash impact of the disruption for 2018. However, land assets are long-term assets and few buyers enter the market with a short-term perspective. So, how global trade negotiations play out in the months ahead will continue to impact commodity prices, market confidence and, ultimately, underlying asset values, including farmland. Finally, don’t forget about negotiations currently occurring on the new Farm Bill – this policy is likely to impact the countryside for the next several years. Stay tuned for further analysis as new information surfaces on all these topics.
Palo Alto County:
80 +/- acres, located south of Mallard, recently sold at a sealed bid attorney auction for $8,525 per acre. The farm consisted of 78 +/- tillable acres with a CSR2 of 87.8, and equaled $99/CSR2 point on the tillable acres.
338 +/- acres recently sold at public auction. The land consisted of four adjacent bare-land parcels of 77, 155, 37 and 69 total acres, with +/- tillable acres of each being 76, 139, 37 and 68. The average CSR2 indexes were 69.9, 67.4, 64.1, and 66.2, respectively. The sale prices per gross acre were $6,000 for the 77 acres, $4,645 for the 155 acres, $6,450 for the 37 acres and $6,250 for the 69 acres. The overall sale averaged $85/CSR2 point on the tillable acres.
39 +/- acres, located northwest of Lincoln, recently sold for $10,513 per acre. The farm consisted of 32 +/- tillable acres with a CSR2 of 92.5 on the cropland, and equaled $138/CSR2 point on the tillable acres. The buyer was an investor.
156 +/- acres, located northeast of Menlo, recently sold for $6,940 per acre. The farm consisted of 136 +/- tillable acres with a CSR2 of 64.9. The sale equaled $123/CSR2 point on the tillable acres.
40.63 +/- acres, located southwest of Eldora, recently sold at public auction for $6,500 per acre. The farm consisted of 38 +/- tillable acres with a CSR2 of 84. The farm had no road frontage and was accessed by a ¼ mile long grass driveway easement across a neighbor. The sale equaled $82/CSR2 point on the tillable acres.
38.5 +/- acres, located east of Hills, recently sold at public auction for $8,950 per acre. The farm consisted of 38 +/- tillable acres with a CSR2 of 84. The sale equaled $107/CSR2 point on the tillable acres.
80 +/- acres, located south of Stuart, recently sold for $7,368 per acre. The farm consisted of 77 +/- tillable acres with a CSR2 of 74.9. The sale equaled $102/CSR2 point on the tillable acres.
314 +/- acres, located southeast of Arispe, recently sold for $3,850 per acre. This gently rolling farm with terraces had a CSR2 of 61.5, and 275 +/- acres enrolled in 3 separate CRP contracts with a combined annual payment of $49,412.
155 +/- acres, located west of Keswick, recently sold at public auction for $8,000 per acre. The farm consisted of 147 +/- tillable acres with a CSR2 of 70 and included 2 machine sheds and a 28’ grain bin. The sale equaled $120/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.