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Serving: IA
barn and farmhouse in winter
LOOKING FORWARD: Interest rates, crop production prospects and grain prices will affect land values in 2019.

Stability, despite low crop prices

Iowa land values continue resilience as demand for farmland remains strong.

The early 2019 Iowa farmland market continues its overall resilience and stability. Value differences do exist from neighborhood to neighborhood. However, these differences are most pronounced in areas where either strong or poor crop yields have occurred.

Regardless of the area, high-quality farms continue to sell best. Above-average soil types, adequate to good drainage, easy farmability, and well-managed fertility levels tend to be major value influences. Farmers continue to pursue acquisitions when they make strategic sense to the operation of their farming business. Likewise, nonfarming investors remain active in the Iowa market.

Looking to the fast-approaching 2019 crop year, several marketplace drivers will continue to influence land sales. First, crop production from recent years still plays an important role in current land sales. Typically, the more bushels grown in an area, the more competitive most land sales in that area prove to be. Add to that, people are closely watching to see how early-season field operations progress.

Interest rates headed up?
Next, keep an eye on the level and direction of interest rates. Any meaningful increase in long-term rates during 2019 will add pressure to farmland values. Many are expecting the Federal Reserve to again raise short-term rates at least twice in 2019, which would be a continuation of a pattern from the past two years (albeit a slightly slower pace). Short-term rates don’t directly impact long-term borrowing costs, but short-term rates do impact farm operating notes, thus increasing the cost structure for current farm operations.

Commodity markets are a major influencer in actual farm profitability, as well as the collective confidence and psyche of the Midwest land market. The result of how global trade negotiations play out in the weeks and months ahead will continue to impact commodity prices and underlying asset values, including farmland.

Lastly, keep in mind that February was an important month for determining crop insurance price levels for 2019 crop production. Keep an eye on both the level and direction of commodity prices between now and spring planting. Stay tuned for further analysis as new information surfaces on all these topics.

NORTHWEST

Lyon County: Northeast of Rock Rapids, 80 acres sold at public auction for $12,200 per acre. The farm consists of 78 tillable acres with an 88.5 CSR2 and equals $141 per CSR2 point on the tillable acres.

NORTH CENTRAL

Butler County: Located near Greene, 77 acres sold at public auction for $7,800 per acre. The farm has 74 tillable acres with an 87.9 CSR2 and equals $92 per CSR2 point on the tillable acres.

NORTHEAST

Fayette County: Southeast of Fayette, 80 acres sold at public auction for $8,700 per acre. With 79 tillable acres and an 87.5 CSR2, rating this sale is $101 per CSR2 point on the tillable acres.

WEST CENTRAL

Calhoun County: North of Rinard, 80 acres sold at public auction for $9,500 per acre. The farm consists of 77 tillable acres with an 83 CSR2. The sale equals $118 per CSR2 point on the tillable acres.

CENTRAL

Boone County: Northeast of Boone, 40 acres recently sold for $8,950 per acre at public auction. The farm consists of 38 tillable acres with a CSR2 of 82.4, and the sale equals $114 per CSR2 point on the tillable acres.

EAST CENTRAL

Clinton County: North of Calamus, 116 acres recently sold at public auction for $10,600 per acre. The farm consists of 115 tillable acres with an 84.6 CSR2. The sale equals $126 per CSR2 point on the tillable acres.

SOUTHWEST

Cass County: South of Massena, 221 acres sold at public auction for $3,400 per acre. The farm has of 184 tillable acres with a 55.1 CSR2, equaling $74 per CSR2 point on the tillable acres.

SOUTH CENTRAL

Warren County: South of St. Mary’s, 66 acres recently sold for $3,685 per acre. It has 38 tillable acres with a 58.3 CSR2 with the balance of land being timber and a creek.

SOUTHEAST

Wapello County: East of Ottumwa, 140 acres recently sold at public auction for $2,550 per acre. The farm consists of 66 tillable acres with a CSR2 of 58.3. All the tillable land is enrolled in CRP through September 2020. The balance of the land is timber and wooded draws.

Hertz Real Estate Services compiled this list, but not all sales were handled by Hertz. Call 800-593-5263 or visit hertz.ag.

 

 

 

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