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  1. #1
    Senior Member rswfarms is on a distinguished road
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    Prices of farmland remain flat

    No big suprise here LANDBARON, just what I have been predicting for the rest of 2013. Article is below for your reading pleasure.

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    WASHINGTON — Farmland values in the Midwest were stable during the second quarter of 2013, marking the first time they have failed to rise in four years, the Federal Reserve Bank said Thursday.

    Bankers hinted the boom of the past few years may be coming to an end.

    The Federal Reserve Bank of Chicago said the average dollar value of “good” farmland across Iowa was flat for the April 1 to July 1 period. Despite the quarter, land values in the country’s largest corn- and soybean-producing state have jumped 18 percent since July 1, 2012 — reflecting the strong farm economy and booming demand for productive land.

    Similar to Iowa, land prices across other states covered by the Federal Reserve branch have seen sharp gains over the last year, but they posted mixed results during the second quarter. Land values in Indiana and Wisconsin rose 5 percent and 1 percent, respectively, but Illinois and Michigan had small decreases. Overall, the five-state region was unchanged during the second quarter with prices climbing 17 percent from a year ago. The last time farmland prices failed to rise was in the third quarter of 2009.

    “While the farmland values on a year-over-year basis still appeared to be soaring, changes in farmland values on a quarterly basis may be presaging shifts in the year-over-year pattern in the latter half of 2013,” said David Oppedahl, a business economist at the Federal Reserve Bank of Chicago. “Survey respondents reinforced this conclusion with their assessments that agricultural land values were likely to be flat in the third quarter of 2013.”

    The survey was compiled with input from 211 agricultural bankers, with 86 percent of respondents expecting stable land values through the end of September. One banker cautioned that land values would go down as grain prices fall.

    Recently, record-high prices for corn, soybeans, wheat and other commodities have left growers flush with cash to purchase more land. And what the farmers don’t pay for out of their own pockets, historically low interest rates provided them with easy and cheap access to money to close the deal.

    But that appears to be changing. The Federal Reserve branch said interest rates on farm loans during the second quarter moved up for the first time since early 2011. And this week, the U.S. Agriculture Department estimated corn prices would average $4.90 a bushel this year, compared to $6.95 a bushel in 2012, with soybeans forecast to drop to $11.35 a bushel from $14.40.

    “The anticipation of lower crop revenues — especially when combined with potentially rising interest rates on farm loans — portended softness in future farmland values,” Oppedahl said.

    In Iowa, where rich soil, favorable weather and ethanol and livestock production help foster demand for limited growing space, farmland values have nearly doubled since 2009. Some prime real estate has sold for more than $20,000 an acre. An acre of farmland that a decade ago sold for an average of $2,275 went for about $8,300 in 2012, according to Mike Duffy, an economist at Iowa State University who watches land prices. Values have risen every year since 2000, with the exception of 2009 when they dropped 2.2 percent.

    Kyle Hansen, a real estate agent at Hertz Farm Management in Nevada, Ia., said the drop in commodity prices — coupled with a cool, wet spring followed by a dry summer — has not left many farmers in a buying mood.

    “Some (farmers) look at what their income is going to be potentially this year or the following years when they are deciding whether they should be purchasing or not,” Hansen said. “That, too, will somewhat tame the aggressiveness of bidders at auctions. It’s somewhat of a flat market.”

    Hansen said farmers will probably wait until after the harvest, when more is known about the output from this year’s crop and the resulting impact on commodity prices, before deciding whether to resume buying land. If commodity prices are steady or higher, land values could post a “minimal increase,” he said, but if “commodity prices stay low we could see a retraction of land values.”

  2. #2
    Senior Member LANDBARON is on a distinguished road
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    Yes

    I think we see a 8.4% decline in values from not until January 2014, and then a stabilization throughout 2014

    Do you like my forecast?

  3. #3
    Senior Member Beaner is on a distinguished road
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    [FONT=Times New Roman][SIZE=3][/SIZE][/FONT]
    [FONT="Arial"][SIZE=3]The [B]U.S. farm economy is showingsigns of slowing as gains in agricultural-land values moderated in some stateslast quarter and bankers indicated they expect farm income to drop in themonths ahead, according to the Federal Reserve.[/B] Survey data Thursdayfrom regional Fed banks in Chicago, St. Louis and Kansas City provide thelatest evidence of challenges to a multiyear boom in the Farm Belt. Record cropprices have fueled a surge in farmland prices and strong earnings for much of theagricultural sector, but prices are falling this year as forecasters predict arecord corn harvest starting next month. Bankers in surveys by the Kansas Cityand St. Louis Fed banks said they expect farm incomes to fall in the thirdquarter. [/SIZE][/FONT]
    [FONT=Times New Roman][SIZE=3][/SIZE][/FONT]
    [FONT="Arial"][SIZE=3]As for farmland, the ChicagoFed survey showed no quarterly increase in value for the first time since 2009,while the Kansas City Fed saw quarterly gains continue to slow, with the valueof nonirrigated cropland rising 1.8% on a non-seasonally-adjusted basis.Farmland in the St. Louis district, which includes parts of the Midwest andSoutheast, jumped 11% in the second quarter after declining slightly in thefirst quarter. [/SIZE][/FONT]
    [FONT=Times New Roman][SIZE=3][/SIZE][/FONT]
    [SIZE=3][FONT="Arial"]"I don't foresee a collapse like we saw in residential real estateand commercial real estate. I do see a correction," said Sam Miller,managing director of agriculture banking at BMO Harris Bank, who expects landvalues to fall as much as 30%, but over a three- to five-year period.[/FONT][FONT="Arial"] [/FONT][/SIZE]
    [FONT=Times New Roman][SIZE=3][/SIZE][/FONT]
    [FONT="Arial"][SIZE=3]In the Kansas City survey, anincreasing number of bankers in the region, which includes parts of the GreatPlains and Rockies, say they think farmland values have peaked. But a majorityof those expecting declines see a drop of less than 10% over the next year.Bankers also see declining incomes having less of an effect on farmland values,with low interest rates, overall wealth in the farm sector and limitedinvestment alternatives playing larger roles. [/SIZE][/FONT]
    [FONT=Times New Roman][SIZE=3][/SIZE][/FONT]
    [FONT="Arial"][SIZE=3]"There is cheap money tobe had, and farmers have cash on hand," said Bill Pauly, vice president ofthe Kansas Corn Growers Association. The retired farmer expects returns to beabout the same as a year ago on the 1,000 acres of corn and soybean fields heowns in the state's northeast corner and has farmed. Favorable growing weatherafter last year's drought will mean larger volumes at harvest, offsetting theprice declines. Mr. Pauly said there will need to be lower prices for some timebefore incomes fall enough to drive down farmland values. [/SIZE][/FONT]
    [FONT=Times New Roman][SIZE=3][/SIZE][/FONT]
    [FONT="Arial"][SIZE=3]Nationally, farm incomes haveclimbed to levels not seen since the early 1970s when adjusted for inflation.The bank surveys showed little sign of problems for lenders. In the Chicagosurvey, loan-repayment rates rose, with 94% of the lenders surveyed reportingno significant repayment problems. Bankers in the Kansas City survey reported a pickup in operating loandemand in the face of rising input costs, but few nonperforming loansand available funds to meet current demand. [/SIZE][/FONT]
    [FONT=Times New Roman][SIZE=3][/SIZE][/FONT][FONT="Arial"]Nathan Kauffman, an economist with the KansasCity Fed, said debt levels on average aren't raising concerns, but groups suchas young farmers and those who expanded rapidly during the recent boom haveconsiderably higher leverage[/FONT]

  4. #4
    Senior Member rswfarms is on a distinguished road
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    Quote Originally Posted by LANDBARON View Post
    Yes

    I think we see a 8.4% decline in values from not until January 2014, and then a stabilization throughout 2014

    Do you like my forecast?
    Yes, I agree that we could see a decrease of 5 to 10% in farmland values for the 2014 fiscal year. Actualy not to bad considering that Iowa farmland has almost doubled in value from 2010 to July of 2013. It certainly been a wild ride the last 5 years in the Iowa farmland market. I still remember when guys on AGWEB said to sell our farmland at $3,000/acre. LOL
    Now it is at $15,000/acre.

  5. #5
    Senior Member rswfarms is on a distinguished road
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    Say LANDBARON, it appears from the below recent farmland sales that land does seem to have put in at least a short-term top. Only $2 Million for this 1/4 section.
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    FNC Listing Number: L-1300675

    Sold at: $2,000,000.00
    State: Iowa
    County: Boone
    Acres: 160

  6. #6
    Senior Member LANDBARON is on a distinguished road
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    Farmland is a great investment right now!!!

    Stock market will continue to crumble.

  7. #7
    Senior Member rswfarms is on a distinguished road
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    I believe the below farm on the market may be a sign that at least a short-term top is being approached in the farmland market. 6 months ago I believe it would be on the maket for a total price of 5,500,000.00. Now it is listed at $4,924,125.00. Given the current uncertain corn price action in the next 2-4 years. it is probably fairly priced at the asking price of $4.9 Million Dollars. It has low CLASS A Soils, so a slightly above average Iowa farm. Could probably use some drainage tile, but what Iowa farm couldn't use some tilling. Listing is below:

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    393 acres Dallas County, Iowa
    Hwy. 141, Perry

    Large tract along 4-lane state highway in Dallas Co.

    Price: $4,924,125.00

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