September 2018 Wallace’s Farmer “MarkePlace Extra”

The conclusion of the 2018 growing season is rapidly approaching, and harvest operations are officially beginning in the central Corn Belt.  Like many years, there has been a good deal of variation in weather across the state of Iowa during 2018, and the various weather patterns have impacted growing conditions.  Many areas have enjoyed a generally smooth growing season, with adequate moisture throughout the spring and summer (central and east central).  Other areas have struggled at times with either too much (northwest, north central), or too little (southern), rainfall during 2018 and crops in these areas have suffered from less than ideal conditions.  At one point this summer, we experienced historic flooding and moderate drought within just a few counties of each other.  Fortunately, there is an expectation that the aggregate harvest numbers for the state of Iowa will show another large overall crop.  

As harvest proceeds, the farmland marketplace is gearing up for another fall-winter sales season.  Because of localized differences in growing season success, don’t be surprised if local influences perhaps play a slightly larger role in sale results this fall.  In areas where another big crop is produced, we expect to see continued market stability, even in the face of lower grain prices.  However, in other areas where crop yields are disappointing, there is the 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.  And farmers are likely to remain the most prevalent group of buyers, even though many non-farming investors continue to be 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 get a ‘read’ on the mood of the market, keep your eyes fixed on several factors:  First, the level of success (or lack thereof) in the 2018 growing season will help determine the ‘mood in the countryside’ this fall.  Second, increasing interest rates may 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. While short-term rates don’t directly impact long-term borrowing costs, short-term rates do directly impact farm operating notes.  Indirectly, we anticipate that long-term rates are likely to 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.  How global trade negotiations play out in the days and months ahead will continue to impact commodity prices 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.

Northwest

O'Brien County

120 +/- acres, located south of Hartley, recently sold at public auction for $10,550 per acre. The farm consisted of 110 +/- tillable acres with a CSR2 of 94.8, and equaled $121/CSR2 point on the tillable acres.

NORTH CENTRAL

Franklin County

156 +/- acres recently sold at public auction for $9,100 per acre. The farm consisted of 152 +/- tillable acres with a CSR2 of 81.2, and the farm included two wind turbines paying $4,000 each annually, with future payment escalators. The sale equaled $115/CSR2 point on the tillable acres.

NORTHEAST

Delaware County

64 +/- acres, located northwest of Greeley, recently sold for $4,221 per acre. The farm consisted of 33 +/- tillable acres with a CSR2 of 56.1 on the cropland. The buyer was a local farmer.

WEST CENTRAL

Monona County:

52 +/- acres, located northeast of Ticonic, recently sold for $4,550 per acre. The farm consisted of 42 +/- tillable acres with a CSR2 of 20.1.  The sale equaled $280/CSR2 point on the tillable acres.  Yes, you read that right.

CENTRAL

Hardin County:

156 +/- acres, located southwest of Buckeye, recently sold at public auction for $9,250 per acre.  The farm consisted of 151 +/- tillable acres with a CSR2 of 84.  The sale equaled $113/CSR2 point on the tillable acres.

EAST CENTRAL

Clinton County:

160 +/- acres, located northwest of Andover, recently sold at public auction for $6,450 per acre. The farm consisted of 135 +/- tillable acres with a CSR2 of 80.  The sale equaled $95/CSR2 point on the tillable acres.  The farm also included 5.5 acres of CRP and an older house and buildings.

SOUTHWEST

Adair County:

120 +/- acres, located southwest of Adair, recently sold for $3,858 per acre. The farm consisted of 92 +/- tillable acres with a CSR2 of 52.4. The sale equaled $96/CSR2 point on the tillable acres.

SOUTH CENTRAL

Clarke County:

130 +/- acres, located west of Woodburn, recently sold at public auction for $4,080 per acre. This CRP parcel had a CSR2 of 62.3, along with 18 acres of timber.   

SOUTHEAST

Van Buren County:

83 +/- acres, located near Keosauqua, recently sold for $2,950 per acre. The farm had 49 +/- tillable acres with a CSR2 of 43.4; the cropland is currently in hay production, and the balance of the farm is in pasture and timber. 

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.