The Federal Reserve Bank of Chicago released the results of its land value survey last week. It showed the value of Iowa farmland has risen by 8% since July of 2009. The increase during the past 12 months has been made largely on the strength of commodity prices, demand for grain and the prospect of tight grain supplies.
The report is based on a survey of 198 ag bankers in the Chicago Fed's district which includes Iowa, Illinois, Michigan, Indiana and Wisconsin. The report is the latest indicator of continuing strength in farmland values in Iowa, which have doubled on average during the past decade - between the years 2000 and 2010.
While the Chicago Fed's report doesn't put a dollar amount on average farmland values, the Iowa State University annual survey released last November showed an average farmland price in Iowa of $4,203 per acre. Economist David Oppedahl of the Chicago Fed says commodity prices have shown strength and stability through the summer months of 2010. Corn prices are up more than 20% and soybeans are up 7%. Cattle and hog prices have reached profitable levels for the first time in three years.
Cattle and hog prices rose this summer, as did corn and soybeans
On the Chicago Board of Trade last Friday, August 27, 2010, corn for December delivery closed up 4 cents per bushel to $4.36, up 22% from July 1, 2010. Soybeans for November delivery rose 11 cents per bushel to $10.26 on August 27, 2010, up 11% since mid-summer. Likewise livestock prices have strengthened. Hog prices are up 6% since early July and almost 30% from January 1, 2010. Cattle prices are up 10% from July 1, 2010.
While the Fed report shows Iowa farmland values up 8% during the past 12 months, it shows Illinois farmland up 5% and Indiana up 4%. Wisconsin, whose dairy farmers are stressed by low milk prices, reported a 1% drop in farmland prices during the past 12 months. The report says the percentage of ag loans having repayment problems in the Chicago Fed district is under 4%.