Lower crop prices affecting Iowa farmland sales

Lower prices for corn and soybeans are affecting the market for Iowa farmland, with fewer bidders showing up for auctions.

The Iowa Realtors Land Institute annual land survey that was released in September indicated Iowa farmland values dropped 8.8 percent over the past year, the largest decrease in land values in more than a decade.

That decline is expected to show up again Friday when the Center for Agriculture and Rural Development at Iowa State University releases its 2014 Land Value Survey.

Troy Louwagie of Hertz Real Estate Services in Mount Vernon said the change in price outlook has brought a shift in market dynamics.

'We used to see a number of potential bidders at farmland auctions,” Louwagie said. 'In recent months, we've seen that number reduced to as few as two.

'Farmers represented nearly 80 percent of the land buyers in the past year. The weaker prices for corn and soybeans during the past 12 months have made them more cautious of land purchases.”

Corn and soybean prices are nearly $2 per bushel below the record highs of a year ago. Louwagie said income is a key driver to support the underlying confidence of expansion-minded farmers.

'The higher-quality land is 5 percent to 10 percent lower in value, while the medium- and low-quality land values are 5 percent to 15 percent lower,” he said.

Kirk Weih of Hertz Farm Management in Nevada, Iowa, said corn and soybean crop planting projections for 2015 have put a damper on farm income. Iowa producers are expected to plant 2.7 million fewer acres of corn and 3.3 million additional acres of soybeans.

'Ending stocks for corn are expected to increase 858 million bushels from 2013 to 2014,” Weih said. 'Ending stocks for soybeans are projected to rise 403 million bushels during the same period.

'That has reduced expectations on farm average prices for corn to $3.50 to $4 per bushel and soybeans $9.50 to $10.50 per bushel.”