January 2022 Wallace’s Farmer “MarketPlace Extra”

Doug Henlsye, Hertz Real Estate Services

As we wrap up one year and begin another, I cannot help but think back 12 months and marvel at all that has occurred in agriculture – and our world – during 2021. The COVID pandemic continued, but life started to trend toward some sense of normalcy. A new U.S. President and administration assumed the mantle of power. The bull market in commodity prices, coupled with a solid growing season, ushered record profits at the farm level. Throughout the Corn Belt, we saw land values surge 20-30% higher year-over-year, depending on the survey you review. As a result of the strength, astonishingly high sale volumes were offered to the land market in 2021. When the final numbers are tallied, I suspect 2021 will reflect a record number of sales. Somehow, the record supply offered to the market this past year was outpaced only by an even more incredible demand for farms. Farmers, investors, institutions – they’ve all been aggressive buyers – and this supply-demand imbalance caused land prices to move consistently higher through the year. Many factors were in play there – good crops, good prices, low interest rates, re-entry of inflation, etc. It has been a historic year, and some are predicting it will continue.

As we enter a new year, I do believe the market will continue to reflect strength. I also believe that it will be difficult for the Iowa farmland market to duplicate all its 2021 results into and through 2022. Does this mean market weakness? No, weakness would not characterize my thinking. But I believe there will be some key market differences developing for 2022 that are worth watching. For one, even with continuing strength in commodities, on-farm profits are very likely to be trimmed by higher input prices for ’22 production. This reduced margin may temper some of the enthusiasm widely seen in the ’21 market. Second, inflation has roared back into our general economy, reaching levels not seen for 30+ years. As a result, the easy-money posture of the Federal Reserve is likely to transition towards something more hawk-ish in 2022, with a likely increase in interest rates on deck. Incrementally higher interest rates may also temper market enthusiasm. Third, China’s buying in 2020 and 2021 led to a huge demand spike for commodities, coupled with re-bounding corn demand for ethanol in 2021; can these demand drivers continue in 2022 (e.g., China, ethanol)? Said differently, in 2021 it was as if every factor that could play into pushing land values higher, aligned to do so. As we now begin 2022, if I’m honest, I’m beginning to see some possible light headwinds develop. Stay tuned. For now, however, enjoy the amazement that comes with the land value advancement in 2021.

NORTHWEST

Lyon County:

80 +/- acres, located west of Doon, recently sold at public auction for $19,000 per acre. The farm consisted of 79 +/- tillable acres with a CSR2 of 67.0, and equaled $287/CSR2 point on the tillable acres.

NORTH CENTRAL

Mitchell County:

81 +/- acres, located near McIntire, recently sold at public auction for $17,500 per acre. The farm consisted of 77 +/- tillable acres with a CSR2 of 83.2, and equaled $221/CSR2 point on the tillable acres.

NORTHEAST

Allamakee County:

75 +/- acres, located northwest of Waukon, recently sold at public auction for $8,667 per acre. The farm consisted of 56 +/- tillable acres with a CSR2 of 47.0, and equaled $247/CSR2 point on the tillable acres. Note: The non-tillable balance of the farm was in 3 separate timber patches.

WEST CENTRAL

Monona County:

154 +/- acres, located southeast of Whiting, recently sold at public auction for $12,500 per acre. The farm consisted of 150 +/- tillable acres with a CSR2 of 71.2, and equaled $179/CSR2 point on the tillable acres.

CENTRAL

Hardin County:

35 +/- acres, located northeast of Hubbard, recently sold at public auction for $13,200 per acre. The farm consisted of 35 +/- tillable acres with a CSR2 of 84.8, and equaled $157/CSR2 point on the tillable acres.

EAST CENTRAL

Benton County:

480 +/- acres, located west of Urbana, recently sold for $13,200 per acre. The farm consisted of 470 +/- tillable acres with a CSR2 of 86.8, and equaled $155/CSR2 point on the tillable acres.

SOUTHWEST

Montgomery County:

73 +/- acres, located south of Red Oak, recently sold at public auction for $9,000 per acre. The farm consisted of 64 +/- tillable acres with a CSR2 of 74.8, and equaled $137/CSR2 point on the tillable acres.

SOUTH CENTRAL

Wayne County:                                                                                                          

63 +/- acres, located northeast of Humeston, recently sold at public auction for $10,000 per acre. The farm consisted of 58 +/- tillable acres with a CSR2 of 80.1, and equaled $137/CSR2 point on the tillable acres.

SOUTHEAST

Washington County:

81 +/- acres, located north of Washington, recently sold at public auction for $16,700 per acre. The farm consisted of 78 +/- tillable acres with a CSR2 of 91.8, and equaled $189/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.