BLOOMINGTON – The value of high-quality farmland remains strong compared with a year ago while lower quality land remains steady despite a drop in the first quarter of the year.
Those were the findings shared with attendees at this week’s Illinois Land Values Conference at the Double Tree hotel in Bloomington hosted by the Illinois Society of Professional Farm Managers and Rural Appraisers.
“This spring, we’ve had sales that have ranged from $5,500 an acre to $13,000 an acre depending on where it’s at,” said David Klein, the conference’s general chairman.
ISPFMRA found that the better ground with a higher percentage of tillable acreage and strong demand brought the highest prices. Many anticipate supply to remain fairly tight and that may have something to do with land values sustaining their levels. As long as supply is tight and interest rates don’t rise too quickly, land values should hold steady.
Dr. Gary Schnitkey from the University of Illinois sees fairly stable land prices down the road, although they could eventually drop slightly. Cash rents remain stable, according to Schnitkey.
“We are sort of in this rut for cash prices of mid to high $3.00 and sort of in the $9.50 range for soybeans,” Schnitkey explains. “We are likely to see those prices in that range until we see something happen on the supply side.”
Exceptional yields have really helped the situation in recent years. If you plug an average trend line yield into your budget at these prices, you will have a tight situation which could result in financial losses. While many farmers have positive balance sheets, some producers will be eroding working capital.
“Those farms that have tight working capital and tight debt and equity positions are being faced with some pretty tough decisions often around cash rents and keeping cash flows in line,” Schnitkey notes.
Speakers for Thursday’s 2018 Illinois Land Values Conference included Dr. Bruce Sherrick, professor of Farmland Economics and director of the TIAA Center for Farmland Research at the University of Illinois and Dr. Dave Kohl, professor emeritus at Virginia Tech. Kohl looked at ag land values across the country and provided a general ag economic outlook.
Everyone attending the conference received a copy of the Illinois Land Values and Lease Trends Report.