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December Land Values

Date: 
Author: 
Mike Morris
Educational Opportunities: 
Articles
Interests: 
Grain, Dairy, Young, Beginning Farmers
Home > Education & Events > December 2018 > December Land Values
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The Chicago Federal Reserve Ag Letter for November 2018 indicates farmland values for the 3rd quarter fell by 1% for the Seventh District (Illinois, Indiana, Iowa, Michigan and parts of Wisconsin). The Minneapolis Federal Reserve indicates land values across the Ninth District states (Minnesota, Montana, North Dakota, South Dakota and parts of Wisconsin) were “stable on average.”  

There has been limited sales activity across Compeer territory post-harvest; however, there are several farmland auctions upcoming. These are some observations:
  • There is nervousness over the direction of farmland values.
  • Tenants are more willing to walk away from high rents knowing there are not people lined up to take them over.
  • Cash rent trends continue downward.
  • There are significant discounts for “ease of farming” issues – cut up farms with small fields are being discounted heavily.
  • Buyers tend to focus on local properties.
  • Landlords have accepted that cash rents will be lower, but not sure to what extent.
  • Wide variations in price for similar properties - $2,000/acre variations either way from expectations – McLean County, Illinois sales below are an example, but not the only occurrence.
  • The supply of farmland on the market has increased over 2017. A recent Farmers National article indicates their listings are up over 20% from last year. 
  • Values for dairy farms, especially small dairies continues to deteriorate.
 
Recent Land Sales by State
Illinois
  • Bureau County – November Auction Estate Sale
    • 144 acres, 140 PI, $10,900/acre, $77.68 Tillable/PI
  • McLean County -  November Auction Estate Sales – 7 parcels
    • 161 acres, 141 PI, $13,800/acre, $99.18 Tillable/PI
    • 79.83 acres, 137 PI, $12,100/acre, $96 Tillable/PI
    • 133.87 acres, 139 PI, $13,100/acre, $96.96 Tillable/PI
    • 130.12 acres, 145 PI, $10,700/acre, $84.66 Tillable/PI
    • 344.48 acres, 139 PI, $13,200/acre, $96.08 Tillable/PI
    • 20.12 acres, 128 PI, $9,100/acre, $87.59 Tillable/PI
    • 63.51 acres, 129 PI, $9,100/acre, $76.88 Tillable/PI
  • Knox County – November auction Estate Sale 4 parcels
    • 102.61 acres, 138 PI, $7,200/acre, $54.86 Tillable/PI
    • 156.98 acres, 136 PI, $7,400/acre, $58.37 Tillable/PI
    • 83.02 acres, 113 PI, $3,320/acre, $63.53 Tillable/PI
    • 38.8 acres, 128 PI, $5,600/acre, $95.33 Tillable/PI
Minnesota
  • Dodge County – November Auction Sale
    • 40 acres, 87.9 PI, $7,400/acre, $96.21/PI
    • 73.38 acres, 91 PM, $7,400/acre, $84.20/PI
  • Dodge County – October Sale
    • 160 acres, 93.9 PI, $8,000/acre, $89.09/PI
  • Nobles County - November Estate Sale
    • 120.12 acres, 95.5 PI, $8,500/acre, $95.5/PI
  • Olmsted County – October Sale
    • 71 acres, 79 PI, $4,929/acre, $74.68PI
  • Meeker County – October Sale
    • 58.96 acres, 76.9 PI, $3,691/acre, $50.00PI
  • Sibley County – November Sale
    • 334.27 acres, 91.9 PI, $6,282/acre, $68.35PI
  • Nicollet County – November Sale
    • 71.58 acres, 90 PI, $7,122/acre, $82.22PI
Wisconsin
  • Dunn County – October Sale
    • 60 acres, 91% Tillable, $2,850/acre
  • Eau Claire – November Sale
    • 107.3 acres, 73% Tillable, $3,867/acre
  • Eau Claire – October Sale
    • 80 acres, Woods, $2,313/acre
  • Fond du Lac – November Sale
    • 114.4 acres, 94% Tillable, $3,479/acre
  • Grant County – October Sale
    • 79 acres, 62/38% Tillable/Pasture mix, $5,822/acre
  • Green County – November Sale
    • 90 acres, 99% Tillable, $7,778/acre
  • Rock County – October Sale
    • 119 acres, 96% Tillable, $7,437/acre
Other Segments:
Dairy
  • Tight margins continue, with ongoing excess supply of milk.
  • Significant stress on all levels especially small dairies
  • Expectations: Softening in dairy farm values with unimproved land values remaining stable
Swine facilities
  • Strong despite of strong inventories, potential tariffs with China and increasing cold storage stocks
  • Continued modest expansion across the territory with new costs increasing
 
Grain facility market
  • Modest new construction with a lot of corn stored outside including expansion of rail loading facilities
  • Larger companies continue to divest from smaller, distant, less profitable facilities
  • Smaller commercial facilities are moving away from commercial use to local farmer use
 
New machinery and equipment
  • Softened with decreases in commodity prices
  • Values have held for late model tractors and equipment in good condition.
  • Prices for older equipment, equipment that has not been well maintained and equipment with high hours have not been holding up as well
  • Values of late model combines and self-propelled sprayers has softened, while tractors in the 100 to 200 HP range are holding their value.
  • Dairy cow values are inconsistent.
About the Compeer Financial Appraisal Team: The Appraisal Team consists of 81 members including appraisers, reviewers and support staff, providing internal appraisals for Compeer Financial, external appraisals for outside entities and appraisal reviews in support of other Compeer business units. The team has experts in specialized agricultural facilities such as agronomy/fertilizer, beef, dairy, grain merchandising and swine, along with traditional agricultural properties, for both internal and external clients.
 
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