| CHICAGO, April 2
CHICAGO, April 2 Farmland values in Iowa, the
top U.S. corn and soybean state, fell 5.4 percent over the past
six months, under pressure from lower grain prices, according to
a benchmark survey of realtors.
Still, the market remains underpinned by strong demand from
wealthy farmers and non-farming investors, said the Iowa
Realtors Land Institute survey, which is based on information
from local farm real estate brokers, lenders and others with
knowledge of land prices.
"The report overall was encouraging because we knew the
price of corn had fallen off 35 percent since this time last
year," Kyle Hansen, past president of the institute and broker
with Hertz Real Estate in Iowa, told Reuters on Wednesday.
The average selling price of farmland across Iowa in March
was $8,286 an acre, compared with $8,758 six months before.
Prices were down 4.6 percent from $8,690 a year earlier.
Agricultural bankers, economists and farmers have expected
land prices to taper off in 2014 after setting a series of
record highs over the past five years as grain markets boomed,
fed by exports and the biofuels expansion. Low interest rates
also spurred demand for land from farmers and outside investors.
Economists and bankers have been keeping a close eye on
Iowa, a bellwether for the U.S. grain economy and also the
largest hog-producing state.
Crop prices, led by corn, have fallen by about a third from
a year ago as grain stocks have expanded. That raised some
concerns that land prices might also tumble, popping a farmland
bubble similar to what happened in 1980s, when overleveraged
farmers lost their land. But most agricultural economists
expected a soft landing since grain farmers have benefited from
strong income and reduced debt over the past five years.
"If asked in December, I would have estimated land values
would have been off more," Hansen said. "But over the last 45 to
60 days, we have seen a renewed strength in commodity prices,
and that has lifted the spirits of a lot of buyers, giving them
confidence that land values are holding steady."
Iowa land values fell in all nine crop-reporting districts,
the survey said, with the biggest drop in the southeast, down
8.4 percent, while the southwest had the smallest decline at 2.1
percent. Northwest Iowa farmland had the highest average price
at $12,930 an acre.
The results are in line with the most recent survey of
Midwest farmland by the Chicago Federal Reserve Bank. That
study, issued in February, showed a steady to softer outlook for
The Iowa survey, which began 1978, was the first glimpse at
what the next Fed survey may reveal when it is released in
(Editing by Lisa Von Ahn)