April 2024 Wallace’s Farmer MarketPlace Extra

Clues from the Market – #3 Input Prices

This month is part 3 of a 5-part series on the most important factors that influence farmland values, including 1) commodity prices, 2) interest rates, 3) input prices, 4) land sale volume, and 5) local historical wealth. In each instance, both the current level, and any recent direction of movement of the factor, can matter. This month, we’re talking about input prices.

I often think of crop input prices as the ingredients to the recipe for growing a crop. Whenever we have either more ingredients and/or more expensive ingredients going into the recipe, it can impact the outcome. In this case, an important outcome each year is profitability. In 2021 and 2022, profitability in U.S. agriculture grew greatly because commodity prices moved higher relative to input prices for producing the crop. In 2023, however, the pendulum swung back, and input suppliers captured a larger portion of the available margin with record or near-record costs for seed, fertilizer, fuel, and equipment. For 2024, input prices have moderated a bit, especially for fertilizer. But, commodity prices have dropped even more than input costs, thereby setting up for the smallest profit margin forecast in several years – and the real possibility of no profit margin for some producers this year. Should relatively high input prices and relatively low commodity prices continue, it will eventually pressure our current land values. Reviewing recent sales from across the State of Iowa still reflects long-term thinking and adequate cash to power sales, as land prices are still holding their own.

NORTHWEST

Dickinson County:

160 +/- acres, located north of Terril, recently sold at public auction for $14,600 per acre. The farm consisted of 157 +/- tillable acres with a CSR2 of 87.7, and equaled $169/CSR2 point on the tillable acres.

NORTH CENTRAL

Butler County:

112 +/- acres, located near Aredale, recently sold at public auction for $9,100 per acre. The farm consisted of 77 +/- tillable acres with a CSR2 of 79.9, and equaled $165/CSR2 point on the tillable acres.

NORTHEAST

Buchanan County:

80 +/- acres, located southwest of Independence, recently sold at public auction for $14,250 per acre. The farm consisted of 76 +/- tillable acres with a CSR2 of 86.9, and equaled $172/CSR2 point on the tillable acres.

WEST CENTRAL

Woodbury County:

155 +/- acres, located southeast of Correctionville, recently sold at public auction for $11,000 per acre. The farm consisted of 143 +/- acres enrolled in CRP with a CSR2 of 67.9, and equaled $175/CSR2 point on the CRP acres. Note: 3 years remained on the CRP contract paying ~$314/acre.

CENTRAL

Dallas County:

80 +/- acres, located southwest of Perry, recently sold at public auction for $17,400 per acre. The farm consisted of 79 +/- tillable acres with a CSR2 of 88.7, and equaled $198/CSR2 point on the tillable acres.

EAST CENTRAL

Linn County:

234 +/- acres, located west of Cedar Rapids, recently sold for $18,250 per acre. The farm consisted of 224 +/- tillable acres with a CSR2 of 88.6, and equaled $215/CSR2 point on the tillable acres.

SOUTHWEST

Fremont County:

125 +/- acres, located near Sidney, recently sold at public auction for $8,250 per acre. The farm consisted of 105 +/- tillable acres, with a CSR2 of 74.4, and equaled $132/CSR2 point on the tillable acres.

SOUTH CENTRAL

Ringgold County:

78 +/- acres, located northeast of Clearfield, recently sold at public auction for $6,500 per acre. The farm consisted of 69 +/- tillable acres with a CSR2 of 51.8, and equaled $141/CSR2 point on the tillable acres.

SOUTHEAST

Henry County:

120 +/- acres, located north of Mt. Pleasant, recently sold for $12,575 per acre. The farm consisted of 118 +/- tillable acres with a CSR2 of 81.7, and equaled $156/CSR2 point on the tillable acres.

Hertz Real Estate Services compiled this list, but not all sales were handled by Hertz. Call Hertz at 515-382-1500/800-593-5263 or visit www.Hertz.ag. 

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