Will We See A Post Harvest Bump in Land Prices Like Last Year?
November 12, 2018
The number of land auctions and sales in the grainbelt picks up each
year after the completion of harvest. Farmers are wrapping up field work and
can turn their attention to land sales, and at the same time, some sellers are
wanting to complete the sale prior to the end of the year or the next cropping
season. This fall is no exception as Farmers National Company is seeing the
uptick in the number of sales.
Last year after harvest, sales prices for good quality farmland increased a
small amount above the flat line trend. Exceptionally good harvest yields added
to farmers' revenue beyond what they had anticipated, giving them a little more
optimism for making capital purchases of land. Also, there continued to be a
lower supply than normal of high quality farms for sale, which increased the
competition for what did come on the market. Competitive bidding brought
about the post harvest bump in land prices that we saw last season.
So what will we see in 2018 with post harvest land sales? Generally,
the grainbelt experienced good to exceptional yields
except for the areas hit by drought or too much rain. Good yields lend to
higher gross revenues for producers despite lower soybean prices this year.
But, this year is different than last year in a number of important ways. For
one, harvest has stretched out and is not complete for some due to the
wet and challenging weather. Secondly, soybean prices are being depressed by
trade tariff issues and no one knows how long the effects of the tariffs will
last. Finally, interest rates are slowly moving higher and even though
rates are still historically low for land mortgages, this has to be considered
when making land purchases.
With this said, Farmers National Company has already held very successful
land auctions this fall in various locations that brought prices above
expectations. Other auctions brought prices right at what was anticipated
while there have been a few that have been delayed sales whereby negotiations
are on-going to make the final sale of the property. Time will tell the
direction of land values as we close out 2018 and move into the late winter
selling season in 2019. You can follow our land sales results at www.FarmersNational.com in the Real
Estate Sales and Auctions section.
President - Real Estate Operations