February 2020 Wallace’s Farmer “MarketPlace Extra”

The calendar has now turned to 2020, and we are well into the new year, as well as a new decade. Landowners across Iowa (and the Midwest) are busy making final arrangements for the upcoming growing season. And while there may still be snow outside your window, the green grass and smells of spring air aren’t too far off!

As we were entering the new year, there was major news coming through on the pending passage of the USMCA agreement. Congressional House leaders finally passed this new version of what we once knew as the North American Free Trade Agreement; USMCA is comfortably supported in the Senate, and it should quickly receive President Trump’s signature in the coming weeks. In addition, trade delegations from the US and China have reportedly worked out a “Phase One” agreement, which is said to involve major purchases of US ag products by China. Both trade agreements are hugely important demand-drivers for many, if not most, of the products we grow and raise here in Iowa. Their passage and implementation are very likely to be supportive to our grain markets in the near-term, and over the coming years. Stronger grain markets are a major driver that underly the Iowa farmland market. I’ve asked/said it many times over the past couple years… if we have enjoyed a generally stable farmland market, given all the negative news we’ve endured since early 2018, what will happen to land values if we have some significant good news enter the market?!? These positive developments certainly should be supportive. Having said that, I’ll withhold any bold predictions until we see implementation of the agreed-to terms of these deals.

Beyond trade optimism, low interest rates continue to support farmland purchases and values. The 10-year treasury bill, which is often the bogey for long-term loan rate pricing, has been trading well under 2% since late last summer, and rates are close to a full percentage point lower than a year ago at this time. If you think 1% doesn’t make that much difference on a farmland loan, go run a loan calculator with different loan rates. I understand that 1% doesn’t sound like much, but it is indeed significant, especially in our current low rate environment.

There are also lots of major wild cards that remain in play for 2020: the upcoming presidential election, the various ongoing military conflicts across the globe, African Swine Fever, etc. There are many things that could up-end our current land market stability. And, because of these wild cards, some would say it’s possible – and even somewhat likely – that we may experience a heightened level of volatility this year. But, with these trade deals seemingly coming together, I personally hold a slightly more optimistic view of the land market for 2020, than I did even 60-90 days ago.

NORTHWEST

Buena Vista County:

160 +/- acres, located near Albert City, recently sold at public auction for $8,000 per acre. The farm consisted of 156 +/- tillable acres with a CSR2 of 87.5, and equaled $94/CSR2 point on the tillable acres.

NORTH CENTRAL

Franklin County:

112 +/- acres, located near Sheffield, recently sold at public auction for $7,900 per acre. The farm consisted of 108 +/- tillable acres with a CSR2 of 84.1, and equaled $97/CSR2 point on the tillable acres.

NORTHEAST

Black Hawk County:

70 +/- acres, located north of Waterloo, recently sold for $5,012 per acre. The farm consisted of 69 +/- tillable acres (42 crop & 27 CRP) with a CSR2 of 85.5, and equaled $60/CSR2 point on the tillable acres.

WEST CENTRAL

Carroll County:

114 +/- acres, located north of Carroll, recently sold at public auction for $10,600 per acre. The farm consisted of 96 +/- tillable acres with a CSR2 of 81.2, and equaled $155/CSR2 point on the tillable acres.

CENTRAL

Webster County:

87 +/- acres, located east of Moorland, recently sold at public auction for $9,200 per acre. The farm consisted of 85 +/- tillable acres with a CSR2 of 82.7, and equaled $114/CSR2 point on the tillable acres.

EAST CENTRAL

Iowa County:

159 +/- acres, located near Amana, recently sold for $10,500 per acre. The farm consisted of 149 +/- tillable acres with a CSR2 of 87.9, and equaled $127/CSR2 point on the tillable acres.

SOUTHWEST

Fremont County:

103 +/- acres, located east of Sidney, recently sold at public auction for $8,000 per acre. The farm consisted of 99 +/- tillable acres with a CSR2 of 92.8, and equaled $90/CSR2 point on the tillable acres.

SOUTH CENTRAL

Madison County:                                                                         

77 +/- acres, located south of Winterset, recently sold for $7,792 per acre. The farm consisted of 69 +/- tillable acres with a CSR2 of 83.2, and equaled $105/CSR2 point on the tillable acres.

SOUTHEAST

Davis County:

73 +/- acres, located east of Bloomfield, recently sold at public auction for $7,000 per acre. The farm consisted of 67 +/- tillable acres with a CSR2 of 56.1, and equaled $136/CSR2 point on the tillable acres.

Hertz Real Estate Services compiled this list, but not all sales were handled by Hertz. Call Hertz at 515-382-1500/800-593-5263 or visit www.Hertz.ag.