Tag Archives: kansas
Is Farmland Caught In A Price Bubble That’s About To Burst?
Angela Bowman, Staff Writer | October 23, 2013 In 2013, the cost of an average acre of Iowa farm real estate jumped by 20 percent in value to $8,400. It’s a story that is seen across America’s fertile heartland with farmland worth about 13 percent more than in 2012. But is farmland caught in a price bubble that soon could burst? John Taylor, national farm and ranch executive for U.S. Trust, a private bank that is part of Bank of America Corp, believes it’s too early to justify fears of a bubble, according to a report by MarketWatch by The Wall Street Journal. “In general, if you ask, is farmland in a bubble, I’ll say, no,” he said. “But if you ask, are some people paying bubble prices, I’ll say, yes.” Farmland has be climbing for the last decade thanks to a surge in farm income and commodity prices, but as these prices settle back down and interest levels start to move higher, some see the next few years as an important test. “This is the moment of truth, I think,” said Brent Gloy, agricultural economics professor at Purdue University. He added that if prices continue to surge in the face of intensifying headwinds, it would then be a troubling sign that a bubble was building in farmland. Read more here. Earlier this summer, Esther George, President of the Kansas City Federal Reserve, argued against the threat of a farmland bubble. Instead, she is confidence in the lessons both farmers and bankers learned – and remember – from being “over-leveraged” in the 1970s. “The run-up in the land values is likely to still create issues for those that are exposed in some way,” she said. “Will we see it as broadly as we did in the ’70s? Not the same scenario. But we will still see some fallout if there is a strong correction.” Continue reading
US Farmland Price Growth Slowest Since 2010
21.10.2013 Growth in US farmland prices fell to its lowest in more than three years, sapped by weaker crop prices, which are prompting farmers to cut back on machinery purchases too. A farmland price index compiled by Nebraska-based Creighton University fell to 50.9 this month, the lowest reading since January 2010. The figure, down from 54.0 in September, was only just above the 50.0 level which indicates no growth at all, with figures below that meaning falling prices, and comes as the market enters its key autumn sales period. Prices are already falling in some major agricultural states, including Illinois, Kansas, Nebraska and North Dakota, which suffered a particularly steep decline in its farmland market. However, values are still rising – albeit at relatively slow rates – in the likes of Missouri and Iowa, the top corn and soybean producing state, where 80 acres of land sold last week for $17,600 an acre, which Hardin County Savings Bank claims is a record. ‘Major impact’ Ernie Goss, the Creighton economist behind the survey, attributed the market’s deceleration to “weaker agriculture commodity prices”, with “poor weather” contributing to fall-offs in states such as North and South Dakota, where early snowfalls are viewed “likely to spill over into the broader economies”. Todd Douglas, chief executive of a South Dakota bank, said that the “record snowfall in the western part of the state is estimated to have caused up to 25,000 cattle deaths which will have a major impact on producers in the areas hit hardest by the storm”. The pullback in agriculture sector prosperity was also evident in an index figure for agriculture machinery which came in at 44.6, its lowest since March 2010, and indicating market shrinkage. “[Machinery] sales are declining and inventories are growing as farmers pull back on their purchases of big ticket items,” Professor Goss said. ‘Much slower pace’ Professor Goss forecast continued softness in the farmland market compared with 2011 and 2012, when annual price growth reached 20-30%. “Clearly, farmland price growth and cash rent expansions in the months ahead will not be as healthy as has been experienced in the past couple of years,” he said. Indeed, bankers questioned by the university forecast rises of 2.5% in farmland cash rents over the next 12 months, down from an expectation of 9.3% when surveyed six months ago. “Bankers clearly expect farmland prices and rents to grow at a much slower pace over the next year,” he said. agrimoney Continue reading
Farmland Price Discovery
SEPTEMBER 5, 2013 Continue reading
