Friday, May 20, 2016

Rate Of Farmland Price Decline Moderates (FPI; LAND)

It's hard enough trading second derivatives (change in the rate of change) using low friction, deeply liquid instruments much less something like farmland but maybe one of the REITs such as Gladstone or FPI could serve as a very rough approximation. Here's Gladstone (fruit & berries, better margins) via FinViz:

LAND Gladstone Land Corporation daily Stock Chart
And the headline story from Agrimoney:

US land prices extend decline - but at slower pace
The downturn in US land prices has continued this month, albeit at a slower pace, with further signs that the decline in prices in the key Midwest state of Iowa may have passed its worst.
An index of land prices compiled by Creighton University came in at 28.4 for May, remaining for a 30th successive month below the 50.0 level which indicated a neutral market.
However, the figure represented a modest improvement on the 26.7 recorded for April.
And the university stressed differing trends across the area covered, which stretches from Wyoming to Missouri, saying that "there is a great deal of variation across the region in the direction and magnitude of farmland prices".
'Still potential farmland buyers'
Indeed, while prices in states such as Kansas, the top wheat-growing state, remained firmly on the slide, with an index figure of 10.7, Iowa, the biggest corn and soybean producer, extended a recovery close to the 50.0 mark.
The Iowa reading rose by 1.7 points month on month to 47.3.
The data follows some evidence in reports last week from the Federal Reserve, the US central bank, which signalled some moderation in the price decline in Iowa, with the quarter-on-quarter rate of falls slowing to 1% in the first three months of the year from 3% in the October-to-December period.
While the Fed reports, drawn from lender surveys, flagged expectations of US farmland prices continuing to decline, they also flagged some brighter spots in the market.
"Some respondents reported there were still potential farmland buyers with resources to make purchases, especially for higher-quality ground and acres in certain locations," said the Fed's Chicago bank, which covers main Midwest states including Illinois, Iowa and Indiana.
Meanwhile, low interest rates have offered some support to land prices by "diminishing the lure of alternative investments", the Chicago Fed added.
The Creighton University study, however, revealed a fresh decline in the fortunes of the agricultural machinery industry, with a sector sales index falling to a "dismal" 10.7 this month from 11.1 in April....MORE