May 2024 Wallace’s Farmer MarketPlace Extra

Clues from the Market – #4 Land Sale Volume

This month is part 4 of a 5-part series on the most important factors that influence farmland values, including 1) commodity prices, 2) interest rates, 3) input prices, 4) land sale volume, and 5) local historical wealth. In each instance, both the current level, and any recent direction of movement of the factor, can matter. This month, we’re talking about the volume of sales.

As we learned in Econ 101, when the supply of something is large, relative to the demand, the price normally softens; and when the supply of something is scarce, relative to demand, the price normally rises. This simple relational idea carries over into the farmland market. In recent years, we saw the number of farms offered to the market grow. However, because of incredible profitability and future profit potential, the demand to purchase additional land outpaced the supply of farms available, and therefore we saw land prices move strongly higher across the Corn Belt.

So, now that we are looking at near breakeven profit forecasts for 2024, will demand for additional land soften? It’s reasonable to think that it could. However, that does not necessarily mean that land prices will fall. We must remember the price point on the supply-demand curve is dependent on the relative supply-demand relationship. If the supply of farms being offered to the market falls more than the demand for additional farms, then the price may not be impacted in the exact way we expect. This is the reality that plays out, neighborhood to neighborhood, all across the Midwest. And that’s crucially important to understand – that is, while the macro-market view may give us big-picture indicators, the local neighborhood dynamics play a huge role in that supply-demand relationship.  We all know areas where land prices never seem to soften, and other areas where sales look like relative bargains – this is often the result of local supply-demand relationships playing out.

NORTHWEST

Sioux County:

77 +/- acres, located north of Boyden, recently sold at public auction for $26,500 per acre. The farm consisted of 73 +/- tillable acres with a CSR2 of 99.0, and equaled $282/CSR2 point on the tillable acres. Note: This farm was under lease for 2024, with the buyer receiving a $500/tillable acre cash rent credit.

NORTH CENTRAL

Worth County:

73 +/- acres, located near Joice, recently sold at public auction for $14,100 per acre. The farm consisted of 70 +/- tillable acres with a CSR2 of 86.3, and equaled $170/CSR2 point on the tillable acres.

NORTHEAST

Winneshiek County:

38 +/- acres, located southwest of Fort Atkinson, recently sold at public auction for $15,300 per acre. The farm consisted of 36 +/- tillable acres with a CSR2 of 82.0, and equaled $197/CSR2 point on the tillable acres.

WEST CENTRAL

Audubon County:

80 +/- acres, located south of Templeton, recently sold at public auction for $15,000 per acre. The farm consisted of 76 +/- tillable acres with a CSR2 of 75.3, and equaled $209/CSR2 point on the tillable acres.

CENTRAL

Poweshiek County:

154 +/- acres, located northeast of Grinnell, recently sold at public auction for $19,500 per acre. The farm consisted of 150 +/- tillable acres with a CSR2 of 93.1, and equaled $215/CSR2 point on the tillable acres.

EAST CENTRAL

Benton County:

80 +/- acres, located north of Belle Plaine, recently sold for $15,625 per acre. The farm consisted of 76 +/- tillable acres with a CSR2 of 88.7, and equaled $185/CSR2 point on the tillable acres.

SOUTHWEST

Pottawattamie County:

123 +/- acres, located southwest of Minden, recently sold at public auction for $13,300 per acre. The farm consisted of 119 +/- tillable acres, with a CSR2 of 66.3, and equaled $207/CSR2 point on the tillable acres.

SOUTH CENTRAL

Clarke County:

149 +/- acres, located east of Weldon, recently sold at public auction for $12,300 per acre. The farm consisted of 141 +/- tillable acres with a CSR2 of 67.6, and equaled $192/CSR2 point on the tillable acres.

SOUTHEAST

Lee County:

39 +/- acres, located south of Argyle, recently sold at public auction for $10,800 per acre. The farm consisted of 37 +/- tillable acres with a CSR2 of 80.8, and equaled $141/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. 

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