Farmland values appear to have stabilized in Iowa, where the market showed signs of softening in the last half of 2013. In Nebraska, South Dakota and Wyoming, land values continue to increase.
Despite reports earlier this year of a possible drop in demand for farmland, prices remain strong, nearing or hitting all-time highs in several areas of our four-state territory during the first six months of 2014. At the same time, the number of land auctions in Iowa, Nebraska and South Dakota has settled at 2013 levels after dropping 25 percent from 2012’s historic highs.
These findings come from our semi-annual appraisal of 64 benchmark farms, the latest of which is based on farmland sales between January 1 and June 30, 2014. The chart below shows the average change in benchmark farm values by state. The number of benchmark farms for each state is shown in parenthesis.
State | Six Month | One Year | Five Year | Ten Year |
Iowa (21) | -0.9% | -3.7% | 103.0% | 245.5% |
Nebraska (18) | 1.5% | 2.2% | 143.6% | 314.7% |
South Dakota (23) | 5.8% | 13.6% | 117.2% | 332.7% |
Wyoming (2) | 5.8% | 9.5% | 7.8% | 68.6% |
In Wyoming, much of the increase in farm values has been driven by strong livestock prices. In Iowa, Nebraska and South Dakota, cropland showed the greatest gains, led by low interest rates and several years of profitable production.
As the market settles in for $4.00 corn prices, profitability will be in question in coming months. Lower commodity prices and decreased margins may put pressure on cash rents and record high land prices.
Here is a state-by-state summary of land prices and auctions through June 30, 2014:
Iowa: Cropland values in some areas were at all-time highs, and average values rebounded from first quarter declines. Unimproved ground sold for an average of $10,200 during the second quarter of 2014. Record sales of $20,400 per acre in Sioux County and $19,700 per acre in Mitchell County contributed to this value. Fifty-five percent of all sales in the second quarter had a per acre price of over $10,000.
Public land auction activity was up 10% when compared to the same period last year, but down 27% from 2012 levels. The number of auction ‘no sales’ was 4.9 percent, down from 5.7 percent in 2013.
Nebraska: After 3 ½ years of significant swings, dry cropland prices held at $5,200 to $5,500 during the last nine months. Sales in the second quarter of 2014 were limited. Nebraska irrigated cropland leveled off at $7,300 per acre, with limited sales.
Public auction activity in the first half of 2014 mirrored levels for the same period of 2013.
South Dakota: Unimproved cropland values declined sharply during the first part of 2014, then recovered to an average price of $5,500 per acre. Sales, however, were limited and activity will need to be monitored to see if prices fully rebound to the highs of 2013’s fourth quarter.
Auction activity for South Dakota in the first half of 2014 was similar to 2013.
Wyoming: The number of sales was very limited -- 27 total. The diverse nature of the sales and highest and best use make it difficult to accurately identify a trend. But pasture and unimproved cropland prices appear to be $750 to $1,500 per acre.
