During the 1920's as the stock market went on it's Roaring 20's run, from it's bear market low of 65.34 on August 29, 1921 to it's bull market high of 381.17 on September 3, 1929, commodity prices collapsed. (following the end of World War I)
Here's a snip from the headline story at Reuters:
..."Farmland is completely different than other real estate, residential or commercial. That market is really tough, where the ag market is very strong," Aumann said.
The average price of an acre of U.S. farmland more than doubled from $1,030 in 1999 to $2,350 in 2008, according to the U.S. Agriculture Department. Over that period the Dow Jones Industrial Average fell over 20 percent and is down further in 2009.
High prices for top Midwest farmland like the Kilton Farm are still holding up these days, shrugging off factors like weaker crop prices or the housing price crash in metro suburban areas due to foreclosures are taken into account.
"Farmland in part is driven by commodity prices. How much retracement we see in commodities is going to end up having some impact on farm values. That's a concern," said Jerry Warner, president of American Society of Farm Managers and Rural Appraisers and chief management officer with Farmers National, a farm management firm in Omaha, Nebraska....
However, from the FDIC:
...Farmland Booms Preceded Hardships for Farmers and Their Lenders
Two significant boom-bust cycles in farmland prices occurred in the 20th century: one in the first two decades of the century and the other in the 1970s. In the first instance, strong population growth, improvement in railroads and shipping that allowed the opening of export markets, and increased productivity through the rapid adoption of tractor power all contributed to rising farm incomes.1 By 1920, crop prices had more than doubled in only five years, and high farmland prices followed.2
Farmland values were similarly inflated by skyrocketing farm income in the 1970s. Strong export demand—due in part to rising incomes and growing populations in importing countries, and a weak U.S. dollar—fueled rapid increases in farm incomes during this period.3 In addition, negative real interest rates caused by high inflation spurred massive borrowing for farmland purchases.
In both instances, strong export demand and growing income levels convinced farmers they were experiencing a new era in agriculture that would continue indefinitely. However, the unprecedented demand for U.S. farm commodities proved only temporary. In the 1920s, the end of World War I precipitated the decline in export demand, while in the 1970s, falling demand was due to greater global competition and a stronger dollar.4 In addition, more restrictive monetary policy reduced the annual inflation rate from more than 13 percent in 1980 to less than 2 percent in 1986, further dampening farmland prices.5 The distress led to thousands of farm bankruptcies, hundreds of farm bank failures, and a sustained decline in farmland prices.6
Farmland Values Have Escalated Sharply, Reaching New Peaks
Farmland values have risen dramatically across the United States during the past several years. Between 1993 and 2003, inflation-adjusted farmland prices were quite stable, increasing by 3.0 percent per year (see Chart 1). Since 2004, however, prices have jumped by an average of 11 percent annually.7 At $2,350 per acre, average farmland values are more than 20 percent higher than their historic peak of $1,940 recorded in 1981....