Agricultural land values rose 7% in the Seventh Federal Reserve District during the first quarter of 2021, compared to a year earlier.
Good farmland values were up 3% from the fourth quarter of 2020 to the first quarter of 2021, according to the survey responses of 143 agricultural bankers in the district. Similarly, farmland values gained 3% in first quarter 2021 compared to fourth quarter 2020.
Annual cash rental rates increased 4% in the district, reversing the downward trend of the previous seven years. Cash rental rates were up 2% in Illinois, 4% in Indiana, 5% in Iowa and 5% in Wisconsin. This was the first increase after seven years of declining cash rents, the longest streak in the history of the survey.
Higher farmland values and cash rents were the result of a turnaround in agricultural prospects, generated in part by higher farm earnings. In March 2021, corn prices were 33% higher than a year earlier and soybean prices were 56% higher. Hog prices were 38% higher than March 2020. In addition, USDA Coronavirus Food Assistance Program distributed $24.1 billion to farmers, with $5.68 billion coming to the region's farmers.
There was a lower amount of farmland for sale in the three-to-six-month period ending March 2021, compared to the same period in March 2020. The number of farms and the amount of acreage sold were also lower during the winter and early spring of 2021 compared with a year earlier, yet there seemed to be surging demand too purchase agricultural land. The demand pushed prices higher, with 74% of lenders predicting an continued increase in farmland values in the second quarter.
Agricultural credit conditions improved in the region, which covers all of Iowa and most of Illinois, Indiana, Michigan and Wisconsin, in the first quarter of 2021, compared to the first quarter of 2020. Repayment rates for non-real estate farm loans were sharply and renewals and extensions were down. The demand for non-real estate loans was also down, compared to a year earlier. The loan-to-deposit ratio in the first quarter of 2021 was at its lowest level since the first quarter of 2015. Interest rates on farm loans edged down in the first quarter.
As of April 1, 2021, the average nominal interest rates on operating loans were 4.42% for operating loans, 4.58% for feeder cattle loans and 4.08% for agricultural real estate. All were lower than any previous survey findings.