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Serving: IA

Everything is high — farmland values, interest rates, grain prices

Jennifer Carrico cornfield
EVERYTHING’S UP: Farmland values continue to be high as grain prices continue the same trend. The concern is with interest rates increasing as well.
Land Values: Farmland continues to be higher than it has been in previous years, which also goes with higher interest rates and is built by higher grain prices.

As I look out the window here while I write this article in early May, I see gray skies, rain puddles, and a guy walking by wearing a winter jacket. The calendar may say spring planting has arrived, but it’s been unseasonably cold and wet into early May. It hasn’t been this way for a few years, as we’ve been spoiled in 2020 and 2021 with smooth planting weather. But every year is different, and this twist of 2022 is just Mother Nature’s way of reminding us of who is in control. 

Another thing that “hasn’t been this way” for a while, is the reality of higher interest rates. As I’ve reported here in the past couple months, in mid-March the Federal Reserve started raising bank-lending rates, with a quarter-point move higher. And now, in early May, the Fed did it again — only this time, it was a half-point increase, with postmeeting messaging that says more interest rate increases are on the way. Some market watchers are speculating we may see as many as five additional rate increases between now and year-end. The rate increases are designed to slow down our economy enough that 40-plus-year high inflation readings are brought back under some semblance of control.

What does this mean for the farmland market? So far, the positive influence from higher grain prices has outpaced the negative influence from an environment of higher interest rates. But at some point that may not be the case. As we get into the summer months, this push-pull dynamic will certainly be worth watching. For now, Iowa land sales have been much warmer than the early-May weather, as reflected in the recent sale examples that follow from across the state of Iowa.

NORTHWEST

Sioux County. About 125 acres east of Hospers recently sold at public auction for $22,100 per acre. The farm consisted of 122 +/- tillable acres with a CSR2 (corn suitability rating) of 93.0, and equaled $243 per CSR2 point on the tillable acres.

NORTH CENTRAL                                        

Mitchell County. About 151 acres near Toeterville recently sold for $15,000 per acre. The farm consisted of 148 +/- tillable acres with a CSR2 of 88.0, and equaled $174 per CSR2 point on the tillable acres.

NORTHEAST

Buchanan County. About 60 south of Rowley recently sold at public auction for $10,300 per acre. The farm consisted of 52.1 +/- tillable acres with a CSR2 of 71.2, and equaled $167 per CSR2 point on the tillable acres.

WEST CENTRAL

Greene County. About 160 acres southeast of Paton recently sold at public auction for $14,050 per acre. The farm consisted of 157.7 +/- tillable acres with a CSR2 of 85.4, and equaled $167 per CSR2 point on the tillable acres.

CENTRAL

Story County. About 154 acres west of Huxley recently sold at public auction for $14,700 per acre. The farm consisted of 140.3 +/- tillable acres with a CSR2 of 79.4, and equaled $203 per CSR2 point on the tillable acres.

EAST CENTRAL

Linn County. About 90 acres south of Martelle recently sold for $13,900 per acre. The farm consisted of 87.4 +/- tillable acres with a CSR2 of 77.2, and equaled $185 per CSR2 point on the tillable acres.

SOUTHWEST

Pottawattamie County. About 307 acres east of Oakland recently sold at public auction for $12,200 per acre. The farm consisted of 285.9 +/- tillable acres with a CSR2 of 77.6, and equaled $169 per CSR2 point on the tillable acres.

SOUTH CENTRAL

Decatur County. About 279 acres north of Lamoni recently sold at online auction for $5,900 per acre. The farm consisted of 223 +/- tillable acres with a CSR2 of 64.1, and equaled $115 per CSR2 point on the tillable acres. Note: The non-tillable land was primarily pasture acres.

SOUTHEAST

Keokuk County. About 145 +/- acres west of Sigourney recently sold at online auction for $10,000 per acre. The farm consisted of 136 +/- tillable acres with a CSR2 of 69.2, and equaled $154 per 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, or 800-593-5263, or visit hertz.ag.

 

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