Farmland gloom and doom may be over-rated.
Recently released opinion surveys of farm real estate trends show key Midwest land values stuck in neutral or sliding below 2014 levels. But bankers, farmers and real estate appraisers may be over-reacting.
Actual Iowa land sales in four dozen counties tracked by thePeak Soil Index show good quality farmland surging about $500/acre since May and bouncing past year-ago levels. The index pegs Iowa farmland with a Corn Suitability Rating of 60 worth $8,284/acre, based on a 30-day moving average of actual sales recorded in county court houses. That's up from a low of $7,690 at the end of April. A year ago, the same index found Iowa farmland worth $8,043/acre.
Last week the Chicago Federal Reserve reported good quality Iowa farmland values had tumbled 7% below July 2014 levels, based on its own opinion survey of lenders, farm realtors and appraisers. The Fed blamed lower values on the fact that corn prices were averaging $3.65/bu. in the second quarter of 2015, 21% below a year ago and 48% below two years ago. Soybean prices at $9.63 were down 33% and 35% respectively. Pork and other livestock profits may have offset some of those grain losses, however.
A Farm Credit Services of America benchmark study of farmland trends in its five-state area reported Iowa land values down more than 10% on July 1, compared to values a year earlier. It includes "benchmark" farms with FCS America appraisers adjusting values based on its opinion of local conditions
In contrast, "We've seen a good uptick in Iowa prices since the end-of May numbers," said Paul Kanitra, Peak Soil president and founder. "It clearly looks like Iowa values have found support. Being $500+ off our lows, we have found enough demand for a meaningful rally."
According to the Peak Soil Index, Iowa land values topped in May 2013 at $9,154, about 10% above today's market. The index will be adding Minnesota, Wisconsin and Nebraska farmland to its weekly survey data later this year. DTN readers can follow weekly updates on the Peak Soil Iowa Farmland Index on the Farm Finance page, under Farm Business http://goo.gl/…
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