The price of American farmland may be heading for its first significant drop since the mid-1980s. MetLife Agricultural Finance says that based on certain measurements, market conditions are the worst they’ve been since the Farm Crisis. Agri Money dot Com says land prices likely will fall 20 percent from the top end that was established early last year. MetLife, one of America’s largest ag mortgage lenders, said the slump will end sometime in 2018, blaming the pending downfall on low farm profits. MetLife expects corn and soybean prices to hit bottom next year, but the lower trend likely hangs on through most of 2017 because of record crop production this year. MetLife added lower cash incomes will lead to a reduction in inflation-adjusted farmland prices in 2018, the first significant correction since the ‘80s. Recent data shows farmland prices in Iowa, Illinois and Indiana dropping three percent from July-September of this year.
From the National Association of Farm Broadcasting news service.
From: Agrimoney.com
by Mike Verdin
US farmland price decline extends decline to three years
US farmland prices completed a third successive year of price declines, undermined by weakness in agricultural commodity prices which is expected to leave one-in-five farmers lose money this year.
A land price index compiled by Creighton University came in at 30.8 for this month – well below the 50.0 rate which indicates a neutral market, although above the 25.0 figure recorded for October.
The figure represented a 36th successive month of price decline, said Creighton, which takes its data from major agricultural states including Illinois, Iowa and Kansas.
The university cited falls in the prices of farm produce, with livestock commodity prices down 27% over the last 12 months, and grain values falling by 16.6%.
Into the red
The price decline is expected to leave 21% of livestock producers with negative cashflows – that is, seeing their cash expenses outpace their revenues, a shortfall common among arable farmers too.
“This is approximately the share of farmer with expected negative cash flows for the year,” said Ernie Goss, the Creighton economics professor in charge of the survey.