Nebraska agland prices and sales (click on chart to enlarge)
Land prices and demand continue to be strong from Iowa to Wyoming in the upper Midwest, but the latest data from by Farm Credit Services of America suggest the market for cropland could be leveling off, or in some cases, softening.
After a 325% increase in Nebraska land prices during the last 10 years, the average price increased just 0.7% in 2013.
The boom was fueled by lower than average U.S. yields, strong domestic and international demand for commodities, low interest rates and solid profit margins.
Recently "we’re seeing the rate of price increases leveling off for farmland in some areas we serve,” said Mark Jensen, senior vice president and chief risk officer for FCSAmerica.
FCSAmerica is a financial cooperative and leading lender in Iowa, Nebraska, South Dakota and Wyoming.
FCSAmerica has tracked the values of 65 farms for more than three decades. and also compiled and analyzed more than 3,500 agricultural real estate sales transactions – both auctions and private sales – in the four states during 2013.
The average change in benchmark farmland values as of Jan. 1:
• Iowa: 6 months -2.8%; 1 year 3.4%; 5 years 98.3%; 10 years 282.1%.
• Nebraska: 6 months 0.7%; 1 year 8%; 5 years 143.2%; 10 years 325.9%.
• South Dakota: 6 months 7.2%; 1 year 17.6%; 5 years 109.3%; 10 years 325.7%.
• Wyoming: 6 months 3.4%; 1 year 6.9%; 5 years -3.8%; 10 years 75.2%.
Source: Farm Credit Services of America.
Demand Remains Strong
Land prices and demand for farmland continue to be strong in the four-state area, Jensen said, but buyer sentiment could be affected by decreased commodity prices that will reduce record profit margins of the past few years.
“Even though the number of public land auctions in 2013 was down 25 to 30 percent compared to 2012, auctions were often well-attended with multiple bidders,” Jensen said. “The number of auction ‘no sales’ in Iowa was 6.7 percent in 2013, an increase from 3 percent in 2012. Some sellers may have expected higher prices than the auction high bid. Local farmers continued to make most of the purchases.”
• Nebraska benchmark land values were up 0.7 percent in January 2014 compared to July 2013 and increased 8 percent for the year.
• Nebraska unimproved cropland values are measured separately for dry cropland and irrigated cropland.
• Nebraska dry cropland prices have had significant price swings over the last two years. For the fourth quarter of 2013, prices increased by 15 percent to $5,900 per acre. The price per acre for 2012 and 2013 was $5,500 on average.
• Nebraska irrigated cropland prices continued to rise, selling at all-time highs of $8,100 per acre. Land prices increased 6 percent during the fourth quarter of 2013. For all of 2013, prices were up 4.4 percent compared to 2012.
• Auction activity in Nebraska was off approximately 30 percent in 2013 compared to 2012.