The farmland market definitely closed out 2010 on an upswing. Many areas across the Midwest experienced a very active land market with the result being new high-water marks being set for farm prices. The increase in commodities prices, combined with a relatively low supply of available farms in many areas, pushed buyers to place a premium on those farms that were on the market.
While it is ultimately anyone’s guess where we are headed in 2011, there are indicators out there that will help us see what lies ahead. While some operators experienced poor yields in 2010 (mainly those growers with corn-after-corn), a majority of farmers were able to take advantage of the run-up we saw in the commodities markets, leaving them with the resources to be players in the market in 2011. As long the futures markets continue their positive movement, farmers will continue to be aggressive in pushing the land market. Another point brought up in a recent DTN/Progressive Farmer article (Farmland Continues Its Romp) is that some farmers used money from 2010 for new equipment, meaning that in 2011 any funds that would have been devoted to machinery could be diverted to the purchase of land. The article also reminds us that many investors still see farmland as a solid “buy” because of the steady & known returns, not to mention the tangible aspect of owning farmland.
With all of the positives, the 2011 farmland market looks to be keeping the momentum that the 2010 market built up. Are there any recent sales coming up in your area? Let us know your opinion on where you see the farmland market headed as we break in 2011.
