“Peak Soil Index sales data through February 2016 shows six states it monitors below all-time records set in the last few years. But select counties in Wisconsin are averaging $4,361 per acre, only 2% below their high of a year ago; irrigated Nebraska farmland ran $7,055, about 4% below its 2015 peak; Minnesota crop counties averaged $5,641, off 8% from their 2014 peak; Illinois averaged $7,591, off 8% from its 2104 peak; and Indiana at $6,782 per acre recorded the steepest tumble, off 14% from its peak a year earlier.
“Such adjustments so far seem modest, even miniscule, compared to the collapse in commodity prices the past three years. Overall net farm incomes (including livestock, crops and government payments) could run about 40% below 2014 levels this year, USDA estimated in February. That would be the lowest farm income level since 2002.”
The DTN article noted that, “In contrast, good-quality Iowa farmland averaged $8,123 per acre through February, according to Peak Soil. That’s down about 11% from the state’s all-time high in May 2013.”
Today’s article added that: “The shock to farmland markets typically lags farm incomes by several years: Studies by Iowa State University Economist (Emeritus) Mike Duffy show for every 2% drop in gross farm income, you’d expect cropland values to dip 1%. It’s worked to forecast nearly every period in modern history except the 1970s, when Duffy believes inflation expectations distorted land markets.”
Recall that The Des Moines Register indicated today that: “Faced with declining profits, some Iowa farmers are defaulting on cropland rents…”