Land values ​​could stabilize with high interest rates

The 2022 harvest in Iowa was one of the fastest and most efficient in recent memory. Near ideal soybean cutting conditions in early October preceded an equally cooperative weather pattern for the corn harvest. This allowed the majority of field crop farmers to easily complete 22 production deals before election day. Many growers shared that the results for corn and soybean yields were slightly above pre-harvest expectations in my interviews with them. The mostly better-than-expected yields should translate into a very profitable year for Iowa agriculture.

As we head into the off-season, there are several earth-related topics worth watching. First, the dry harvest weather was a giveaway for efficient harvesting, but much of Iowa is also now rated at some level for drought conditions. From a very practical standpoint, we need legitimate rain by spring to be well positioned heading into the 2023 crop year.

Second, the Iowa land market has seen incredible growth over the past 12 to 18 months. High commodity prices, large farm profits, rock bottom interest rates and pent up demand for land all lined up to drive the market higher. But, with inflation skyrocketing in our general economy, rock bottom interest rates are a thing of the past. I anticipate that higher interest rates will start to factor more into land purchasing decisions in the coming months.

Third, as has been widely reported, costs for various 2023 production inputs are 30% to 100% higher than they were a year ago for 2022 production, compressing margins for 2023 cash budgets. Will strong 2022 profits and still high commodity prices for Crop 23 overcome the next cost price squeeze? All of these topics are widely discussed by potential land buyers considering possible fall and winter acquisitions, and each topic will ultimately influence the Iowa land market. For now, it seems to me that the land market is stabilizing. That doesn’t mean he’s weak. Rather, it means the market is simply adjusting.

NORTH WEST
Dickinson County.
About 119 acres northwest of Everly recently sold at public auction for $15,000 per acre. The farm consisted of approximately 114 tillable acres with a CSR2 (Corn Suitability Score) of 89.6 and equated to $175 per CSR2 point on tillable acres.

CENTER NORTH
Hancock County.
About 57 acres near Klemme recently sold at public auction for $11,800 per acre. The farm consisted of approximately 55 tillable acres with a CSR2 of 78.8 and equated to $155 per CSR2 point on tillable acres.

NORTHEAST
Bremer County.
About 95 acres south of Tripoli recently sold for $14,442 per acre. The farm consisted of approximately 92 tillable acres with a CSR2 of 96.1 and equated to $173 per CSR2 point on tillable acres.

MIDWEST
Calhoun County.
About 114 acres north of Knierim recently sold at public auction for $14,000 per acre. The farm consisted of approximately 112 tillable acres with a CSR2 of 82.7 and equated to $172 per CSR2 point on tillable acres.

CENTRAL
Marshall County.
About 155 acres southwest of Beaman recently sold at public auction for $16,500 per acre. The farm consisted of approximately 148 tillable acres with a CSR2 of 94.7 and equated to $182 per CSR2 point on tillable acres.

CENTER EAST
Cedar County.
About 152 acres north of West Branch recently sold for $8,000 an acre. The farm consisted of approx. 102 cultivable acres with a CSR2 of 50.6, the rest of the farm being open pasture.

SOUTH WEST
Montgomery County.
About 156 acres southeast of Stanton recently sold at public auction for $13,750 per acre. The farm consisted of approx. 150 tillable acres with a CSR2 of 87.3 and equals $163 per CSR2 point on tillable acres.

CENTRAL SOUTH
Wayne County.
About 40 acres southeast of Cambria recently sold at public auction for $7,500 an acre. The farm consisted of approx. 35 tillable acres with a CSR2 of 74.9 and equals $114 per CSR2 point on tillable acres.

SOUTH EAST
Des Moines County.
About 127 acres southeast of Morning Sun recently sold at online auction for $11,500 per acre. The farm consisted of approximately 119 tillable acres with a CSR2 of 80.8 and equated to $151 per CSR2 point on tillable acres.

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

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