Farmland values in the Federal Reserve district that includes most Mid-South states were up in the second quarter of 2013. On average, farmland values in the Federal Reserve’s Eighth District were higher than first-quarter 2013 and second-quarter 2012 levels.
In the latest Agricultural Finance Monitor published by the Federal Reserve Bank of St. Louis, many lenders said they expect prices for quality farmland and ranch and pastureland to increase in the third quarter relative to the third quarter of 2012.
The Eighth Federal Reserve District includes all or parts of Arkansas, Mississippi, Missouri, Tennessee, Kentucky, Illinois and Indiana.
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Quality farmland prices averaged $5,672 per acre in the second quarter of 2013, up 11 percent from an average $5,111 in the first quarter of 2013 and up more than 20 percent from $4,705 per acre in the second quarter of 2012. Ranch and pastureland prices were also slightly higher in the second quarter of 2013, with district lenders reporting average prices of $2,372 per acre, up about 4 percent from $2,274 per acre in the first quarter 2013 and up close to 1 percent from $2,349 per acre the previous year.
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The survey for the report was conducted from June 11 through June 28, 2013. The results were based on the responses of 48 agricultural banks located within the boundaries of the Eighth Federal Reserve District.
Farm income
Average farm income and spending rose slightly in the second quarter of 2013 compared with a year ago. “On net, respondents indicated that second-quarter District farm income, along with capital and household spending, increased modestly relative to their respective levels one year ago,” the report said.
For the third quarter, lenders expect lower farm income in the third quarter of 2013 compared with the third quarter of 2012.
Cash rents
Average cash rents per acre for quality eighth district farmland during the second quarter of 2013 were higher than the first quarter 2013 and the second quarter of 2012. For the second quarter 2013, cash rents for quality farmland averaged $183 per acre, up 6.7 percent from an average $171 per acre in the first quarter 2013 and up 12.9 percent from an average $162 per acre the previous year.
Cash rents for ranch or pastureland average $57 per acre, down from the first quarter’s average of $64 per acre, but remaining above last year’s average of $53 per acre. Lenders expect rents to increase in value for all land categories during the third quarter of 2013.
Loans and repayments
While demand for agricultural credit across the district remained unchanged in the second quarter compared with a year ago, lenders say they expect loan demand to pick up in the third quarter. Surveys showed more funds were available to prospective borrowers during the second quarter of 2013 than a year ago, and should remain so in the third quarter.
Loan repayment rates remained essentially the same compared with a year ago, and are expected to remain unchanged in the third quarter.
Average interest rates on most types of loans increased slightly from the first quarter of 2013, with rates on variable interest loans increasing more than fixed-rate loans.
Also:
Pace of Mid-South/Southeast farmland price appreciation eases
Farmland value on a decade-long climb
Low interest rates and strong commodity prices helping fuel farmland demand…
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