Monday, January 4, 2021

Real Assets: "2021 Farmland Outlook: Buckle Up for a Dynamic Market"

 I hate this. 

There is a real risk that the giant pools of money that circle the globe will land in some of the smaller markets. And though we bear no ill-will toward our hedge and PE brethren (cough-scum-cough) if they land on agricultural commodities they have a direct impact on the average person's existence.

Let them play with gold and bitcoin and other stuff people don't need rather than corn, rice, beans and wheat.

The major ag commodities are up one to three percent to start the new year.

From AgWeb, December 30:

Key forces are converging to send farmland values higher — maybe even to historic levels. After years of stable prices, be ready to see your asset soar.

What is driving the farmland market? 

  • Government support for farmers (ex: Market Facilitation Program and Coronavirus Food Assistance Program payments)
  • Stronger commodity prices.
  • Low interest rates.
  • Limited farmland for sale.
  • Strong investor interest.

“Right now, those factors are all driving farmland prices higher,” says Doug Hensley, president of real estate services for Hertz Farm Management in Nevada, Iowa. “We’ve sold more $12,000 to $14,000 per acre farms from September to December than the last three or four years combined.”

When the COVID-19 pandemic caused shutdowns and stay-at-home orders in the spring of 2020, the land market ground to a halt, says Randy Dickhut, senior vice president of real estate operations for Farmers National Company in Omaha, Neb. 

“Buyers and sellers just both pulled back out of caution and uncertainty,” he says. “Then in the summer, the land market started getting active again, and we saw increased interest in land of all types.”

Dickhut says sales activity for his company was up 49% in October and November versus the same time in 2019.

“Some investors came to the land market for the first time,” he says. “They wanted a safe, long-term investment to park some cash.”

Because of its stability and consistent returns, farmland got on the radar of all types of investors, adds R.D. Schrader, president of Schrader Real Estate and Auction Company in Columbia City, Ind....