Land sales are on a major upswing. We have seen recent land sales and farmland prices rising back to highs reached in 2012 and 2013. So what is driving land prices?
Commodity Prices
Harvest is in full swing in the Northern Plains. Most of the soybean crop has been harvested and corn harvest is picking up. Yields have been spotty but generally better than anticipated. Commodity prices continue to be favorable for the 2021 crop season and looking ahead to the 2022 crop. Prices are off the highs reached during the summer but still at very profitable levels.
Interest Rates
Beyond commodity prices, interest rates continue to be favorable for land values. The favorable rate environment has increased the number of investors purchasing farmland. With inflation worries and more money floating around the economy, investors have purchased an unusually high percentage of recent sales.
Will the prices stay high? That’s a million dollar question. Input prices for the 2022 season have increased dramatically, especially for fertilizer and chemicals, which could reduce profitability. The performance of the commodity markets and interest rate levels as we head into the New Year will provide insight to which direction land values might head.
If you have land to sell or manage or just want to discuss the land market, give us a call anytime and we would be happy to assist.