Harking back to September 2016: "US farmland prices set course for third year of decline":
As we've been saying for years, most recently in February 2016's "USDA Chief Economist Makes A Case For Farmland":
It's too early.We're getting closer but should probably wait for some defaults before swooping.
Even though we think we'll see some upward price pressure [on crops] come late summer, after a meandering downtrend, the reality of farmland investment is that it is only worth a multiple of the cash flow.
(unless you're on the edge of a metro area and have some non-public zoning info)
US land prices approached a fourth year of unbroken decline, amid growing worries over the dent to farm incomes from weak prices, which for corn are below breakeven levels for many growers.A farmland price index compiled by Creighton University from a survey of lenders came in at 39.3 points for October, down a modest 0.3 points for last month, but remaining well below the 50.0 level that indicates a neutral market.The decline, which extended an unbroken run of price declines stretching back to December 2013, came amid worries farm finances prompted by current crop prices, particularly for growers renting land, so facing additional costs.For farmers renting land, crop prices of $3.50-3.75 a bushel, a range which roughly covers the spread of Chicago futures prices out to next summer, are not covering costs for 45% of growers, Creighton's survey showed.Only 2.4% of growers were achieving profits at that level.'Below the breakeven by all means'And given that many growers receive prices below futures – cash corn prices as monitored by Reuters ranged on Friday from a discount to December futures of $0.08 a bushel in Union City, Indiana to $0.45 a bushel in Lincoln Nebraska – profitability prospects may be even worse.Fritz Kuhlmeier, chief executive of Citizens State Bank in Lena, Illinois, said: "Where can I find a spot price for corn of $3.50 a bushel or above today?"Try $3.00 -3.20, which is below the breakeven by all means."December futures were on Monday priced at $3.49 ¾ a bushel.Default worriesThe "weak farm income and low agriculture commodity prices" pose a threat to the viability of some farms, the survey showed.A handful of bankers, some 9.5%, "expect farm loan foreclosures to pose the greatest threat to banking operations over the next five years," said Ernie Goss, the Creighton University economics professor in charge of the survey....MORE