December 2020 Wallace’s Farmer “MarketPlace Extra”
As we close the book on 2020, most would agree that it will be nice to put this year in the rear-view mirror. All the issues we faced – from COVID, to a statewide drought during the growing season, to the derecho storm damage, and concluding with a rough-and-tumble election – created an incredibly disrupted environment. Despite that, our current farmland market has proven incredibly resilient, and Iowa farmland values seem to have held their own – and now, values may even be showing a slight turn higher. How is this possible? Somehow the underlying drivers for farmland have positively aligned.
Specifically, corn and soybean markets rallied – bigtime – beginning in August and have continued higher into and through the harvest season. Producers currently enjoy commodity prices that are near the high-water mark of the past 2 to 3 years. As recently as August 1st, there is almost no-one who would have believed this was possible.
Nearly as significant as the run-up in commodities, farmland buyers across Iowa are also enjoying the substantial benefits from generationally low long-term interest rates. When the impacts of COVID-19 upended our economy, the response from the U.S. Federal Reserve was to slash short-term interest rates to zero, and to do whatever was necessary to create and support an environment for low long-term rates (e.g., major bond-buying, etc.). The Fed’s goal was to spur business spending and economic activity – and thus far, the low rates have definitely spurred additional interest in buying land.
Next, continued government support for agriculture is not all that surprising in an election year. Ag is a major constituency that crosses several important state borders. Over the past 3 years, President Trump has made his trade policies politically palatable, so to speak, by using government program dollars to fill the cash-flow gaps that his policies opened. Several rounds of MFP payments in 2018 and 2019 (e.g., China tariffs), coupled with 2 rounds of CFAP payments in 2020, were examples. For farmers and landowners alike, the continuation of government payments has been land-value-supportive.
Finally, as of the writing of this article, the outcome of the election is not yet known. Depending on who wins, we may see an uptick in sales volume for farms. But thus far in 2020, low sale volumes were one of the more significant factors underlying stable to stronger land. If that were to change substantially and we were to see a larger volume of land come to the market, the chemistry of the market may shift. Here in early November, however, that has not happened – and the early-fall sales noted below represent what some have been calling a Seller’s market.
NORTHWEST
Palo Alto County:
134 +/- acres, located southeast of Emmetsburg, recently sold at public auction for $11,800 per acre. The farm consisted of 130 +/- tillable acres with a CSR2 of 84.9, and equaled $143/CSR2 point on the tillable acres.
NORTH CENTRAL
Franklin County:
115 +/- acres, located near Sheffield, recently sold at public auction for $8,800 per acre. The farm consisted of 107 +/- tillable acres with a CSR2 of 85.0, and equaled $111/CSR2 point on the tillable acres.
NORTHEAST
Fayette County:
149 +/- acres, located west of West Union, recently sold at public auction for $8,100 per acre. The farm consisted of 137 +/- tillable acres with a CSR2 of 80.4, and equaled $110/CSR2 point on the tillable acres.
WEST CENTRAL
Calhoun County:
80 +/- acres, located north of Lohrville, recently sold at public auction for $9,900 per acre. The farm consisted of 76 +/- tillable acres with a CSR2 of 83.3, and equaled $125/CSR2 point on the tillable acres.
CENTRAL
Jasper County:
98 +/- acres, located south of Colfax, recently sold at public auction for $6,750 per acre. The farm consisted of 95 +/- tillable acres with a CSR2 of 68.2, and equaled $102/CSR2 point on the tillable acres.
EAST CENTRAL
Cedar County:
198 +/- acres, located east of Tipton, recently sold for $11,378 per acre. The farm consisted of 198 +/- tillable acres with a CSR2 of 92.6, and equaled $123/CSR2 point on the tillable acres.
SOUTHWEST
Pottawattamie County:
236 +/- acres, located southeast of Council Bluffs, recently sold at public auction for $9,450 per acre. The farm consisted of 218 +/- tillable acres with a CSR2 of 83.9, and equaled $122/CSR2 point on the tillable acres.
SOUTH CENTRAL
Marion County:
120 +/- acres, located south of Monroe, recently sold at private auction for $12,300 per acre. The farm consisted of 111 +/- tillable acres with a CSR2 of 81.7, and equaled $163/CSR2 point on the tillable acres.
SOUTHEAST
Henry County:
115 +/- acres, located northeast of Mt. Pleasant, recently sold at public auction for $8,350 per acre. The farm consisted of 109 +/- tillable acres, with a CSR2 of 81.1, and equaled $108/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.
