(Adds rents, background)
By Christine Stebbins
CHICAGO Feb 13 Prices of quality farmland in
the southern Midwest and mid-South region of the U.S. crop belt
edged higher in the fourth quarter, bouncing back from a
third-quarter slide which halted years of gains, the Federal
Reserve Bank of St Louis said on Thursday.
"Quality farmland values across the district averaged $5,868
per acre in the fourth quarter of 2013, which was modestly
higher than the third-quarter average of close to $5,300 per
acre," the bank said in its quarterly bank survey.
"When measured against figures from a year earlier, quality
farmland values in the eighth district increased by 12.2
The district comprises Arkansas and portions of Illinois,
Indiana, Kentucky, Mississippi, Missouri and Tennessee. The
bank's quarterly survey is based on responses from 49 farm
lenders in the district.
The region is a top producer of corn, soybeans, hogs, winter
wheat and other cash crops.
Cash rents for quality farmland across the district averaged
$190 per acre in the fourth quarter, up 5 percent from the third
quarter. Cash rents for ranch or pastureland were up slightly at
$65 per acre from the third-quarter average of $62 per acre.
The fourth-quarter results reflected a rise in farm income
in the fourth quarter, the bank said. But for the second
consecutive quarter, it added, "more bankers expect quality
farmland values to decline over the next three months relative
to a year earlier," the bank said.
Farmland values in the central United States are closely
tracked by government economists as a gauge of the U.S. economy
and health of the banking system. In recent years, both crop
prices and farmland prices have set records as the burgeoning
biofuels industry and record food exports boosted prices.
But the sharp drop in last-half 2013 grain prices,
particularly corn, in a record harvest one year after a record
drought has stirred concerns the possibility of a ruinous
farmland bubble like the one seen in the 1980s U.S farm crisis.
The steadiness in fourth-quarter land auctions and rent
negotiations will relieve some of those worries.
The St. Louis Fed said that 63 percent of farm bankers
surveyed said the single biggest risk to the district's farmers
in 2014 "stems from lower-than-expected commodity prices," with
the second biggest risk higher costs expected for fuel, seed and
fertilizer. It was those expectations that fed the general
consensus that farmland prices in coming months would ease back,
the bank said.
But bankers surveyed said they see no change in average cash
rents for ranch or pastureland over the next three months
relative to a year earlier. Most 2014 rent arrangements are
contracted in the fourth quarter and first quarter of the year.
The Chicago Federal Reserve is to release its quarterly
survey on Thursday afternoon, while the Kansas City Fed is set
to issue its banker survey on Friday.
(Reporting By Christine Stebbins; Editing by Sophie Hares and