US land market at weakest in at least nine years

From Agrimoney:

The US farmland market has hit its weakest in at least nine years, hurt by the tumble in crop prices to multi-year lows, and with more price declines to come.

A farmland price index compiled by Creighton University, from major agricultural states such as Illinois, Iowa and Kansas, came in with a reading of 20.2 – well below the 50.0 which indicates a flat market.

The reading was down from a figure of 33.7 for September, and was the lowest since the survey began in January 2006.

"Much weaker crop prices continue to take the air out of the bubble in agriculture land prices," said Creighton economics professor Ernie Goss, in charge of the survey, adding that the September figure represented an 11^th successive month showing a decline in farmland values.

'Will begin an erosion'

One of the lenders contacted for the survey, which is drawn from bank chief executives in rural areas, flagged that a recent sale of Kansas land indicated a drop in values of 25-30%, "most likely a result of much lower crop prices".

And more than three-quarters of the bank bosses surveyed forecast a further drop in prices of the next year, with an average estimate of a 5% drop.

At Citizens State Bank in Lena, Illinois, chief executive Fritz Kuhlmeier said: "Reduced commodity prices will stop farmland price increases and begin an erosion, especially in lower quality dirt."...

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Contra, from Agrimoney:
Farmland Partners unveils $25m land-buying spree

Farmland Partners flagged "strong" buyer interest in the US agricultural land market, contrasting with downbeat findings of a survey of lenders, as it unveiled its biggest land buying spree yet, taking its portfolio above 35,000 acres.

The land investment group said it faced "strong competition in farmland markets" from farmers themselves – contrasting with findings by a Creighton University survey released overnight of the worst market conditions since at least 2005.

Farmland Partners earlier this week said that agricultural land has not, on records kept by real estate agents' group Ncreif since 1992, seen a year with negative total returns – ie appreciation plus rental income.

"Contrary to speculative negative reports by the press, farmland prices are still increasing in most of the US," the group said, citing data from the US Department of Agriculture and the Federal Reserve....

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