A softer agricultural land market will continue in 2016, with values for high quality land holding steadier, while lower quality land values decline. Still, despite lower land values scattered across many regions, land values in general will remain historically high when compared to long-term trends, reports Farmers National Company, the nation's leading farm and ranch real estate company.

LAND VALUE: Farmers still paying a premium for productive farmland. Missouri land values linger behind other Midwest states.

"Lower grain and livestock prices are a major factor in the current measured decline in land values," according to Randy Dickhut, vice president of real estate operations for Farmers National Company. "As net farm income continues to fall from the 2013 peak, we expect to see this trend in many agricultural regions of the country."

Price stabilization will carry over into 2016 for some regions as landowners hold on to the high-value land. The supply of land available for sale increased slightly during the last quarter of 2015, but has remained lower than normal. The demand for agricultural land has turned more cautious. Farmers National Company statistics indicate positive long-term economic trends, even with the current softening of ag land values.

The current land value trend may encourage new buyers to enter the market or existing investors to expand portfolios. "As the land market experiences a gradual decline, values remain much higher than just five to seven years ago, due to the positive long-term demand for food and fiber," Dickhut said.

Region land price report

Land values in the Midwestern states are lower than values seen in the past couple of years, but sporadic high-priced land sales of high quality land make up for that slight decline, according to Roger Hayworth, ALC, area sales manager for Farmers National Company in Lafayette, Ind.

"Values are down seven to 10% from six months ago," Hayworth said. "The majority of land is still being bought by local landowners and farmers looking to add another 80 to 100 acres."

Hayworth said if commodity prices do not increase in 2016, there likely will be another slide in land values toward the end of the year. Still, land values remain historically high compared to five or six years ago, Hayworth noted. "Seven or eight years ago, there was a spike off the charts. There were some properties in Indiana that had been valued at $3,500-5,000 that sold as high as $11,000-12,000, but now they're back down to $8,500-10,000. That's still very strong."

Anticipated top prices in the region for 2016 are in Illinois at $11,200 per acre on average for high quality land. These levels are followed by Indiana with values up to $9,000 per acre and Ohio at $7,300 per acre. Missouri comes in at $6,100

Source:  Farmers National Company