young crops growing in field
YIELD PROSPECTS: Growing another good crop is likely to support land values, while a poor growing season would put downward pressure on bids.

Crop development key to land market

Land Values: Success of current growing season will set the mood in the countryside.

The 2018 growing season is underway, and the farmland market across Iowa remains stable. Summer is typically the slowest for land sales, as the focus shifts to crop production. However, farms do continue to come on the market, and the success or struggle of the growing season will help determine the direction of the farmland market this fall and winter.

High-quality farms — those with productive soils, solid fertility and drainage, and high “farm-ability” — continue to draw the most interest and sell well, compared to farms with poorer soils, waterways or other obstructions. Farmers are the most prevalent group of buyers, although many nonfarming investors are active.

There are several things to watch for during the transition to the summertime land market.

First, the success of the current growing season will help establish the “mood in the countryside” come fall. Growing another big crop is likely to be supportive to land values, while a poor growing season may foreshadow pressure on the land market.

Second, any meaningful increase in interest rates is likely to pressure farmland values. With inflation picking up in the past 12 to 18 months, the Federal Reserve seems poised to continue raising short-term rates, which will eventually translate into higher borrowing costs for longer-term maturity notes.

Any significant change in export trade policy (NAFTA, China, TPP) will directly impact grain markets and the countryside — positively or negatively.

The Trump administration has more aggressively approached major trading partners with its desire for fair play on the trade front, and this approach has created nervousness in the grain complex.

Finally, negotiations on the new farm bill in Congress will likely impact growers and farmland values. Stay tuned for further analysis as new information surfaces on all these topics.

NORTHWEST

Sioux County: Northwest of Hull, 65 acres recently sold at public auction for $13,300 per acre. The farm consists of 63 tillable acres with an 88.6 CSR2. Sale includes 2018 farming rights and equals $155 per CSR2 point on the tillable acres.

NORTH CENTRAL

Mitchell County: At public auction, 80 acres sold for $9,450 per acre. It has 79 tillable acres with a CSR2 of 87.2, which figures out to $110 per CSR2 point on the tillable acres.

NORTHEAST

Black Hawk County: North of Raymond, 70 acres sold for $7,000 per acre. The farm has 67 tillable acres with a 75.8 CSR2. Buyer is a local farmer-investor, and the sale equals $96 per CSR2 point on the tillable acres.

WEST CENTRAL

Guthrie County: North of Guthrie Center, 118 acres sold at public auction for $3,600 per acre. With 98 tillable acres and a 56.8 CSR2, it has 69 of the tillable acres enrolled in CRP, and the balance of the farm is in timbered draws. The sale includes 2018 farming rights and equals $76 per CSR2 point on the tillable acres.

CENTRAL

Hardin County: South of Eldora, 77 acres sold at public auction for $8,300 per acre. The farm has 73 tillable acres with an 84.8 CSR2. Sale includes 2018 farming rights and equals $103 per CSR2 point on the tillable acres.

EAST CENTRAL

Linn County: Southwest of Fairfax, 160 acres sold at public auction for $11,300 per acre. The farm consists of 154 tillable acres with an 84.5 CSR2. The sale equals $139 per CSR2 point on the tillable acres.

SOUTHWEST

Pottawattamie County: South of Oakland, 230 acres sold at public auction for $8,200 per acre. With 228 tillable acres and a 77.7 CSR2, this farm included a cash rent credit of $275 per certified acre at closing. The sale equals $106 per CSR2 point on the tillable acres.

SOUTH CENTRAL

Wayne County: Southeast of Humeston, 80 acres recently sold at public auction for $3,000 per acre. The farm consists of 63 tillable acres with a 43.1 CSR2, with 6 of the tillable acres enrolled in CRP, and the balance of the farm in timbered draws. Sale equals $88 per CSR2 point on the tillable acres.

SOUTHEAST

Van Buren County: Near Hillsboro, 100 acres sold for $6,400 per acre. With 90 tillable acres and a 64.0 CSR2, this equals $111 per 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 or visit hertz.ag.

 

 

 

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