Midwest farmland values gain as record crop prices boost demandCHICAGO — Farmland values in five Midwest states rose 13 percent in the third quarter from a year earlier as record corn and soybean prices spurred demand from farmers and investors, the Federal Reserve Bank of Chicago said Thursday.
By: Jeff Wilson, Bloomberg News
CHICAGO — Farmland values in five Midwest states rose 13 percent in the third quarter from a year earlier as record corn and soybean prices spurred demand from farmers and investors, the Federal Reserve Bank of Chicago said Thursday.
Higher commodity prices and crop insurance more than offset losses from the worst drought in 56 years, boosting farm income and demand for land in Iowa, Illinois, Indiana, Michigan and Wisconsin, the Fed said in a report. Land values rose 5 percent from the second quarter, and 36 percent of the 223 bankers surveyed forecast higher values in the fourth quarter. Just 1 percent expected lower prices.
“The drought does not seem to have derailed bankers’ anticipation of further upward movement in farmland values,” David B. Oppedahl, a business economist at the Federal Reserve Bank of Chicago, said. “Survey results indicated that the impetus for higher farmland values actually strengthened during the third quarter of 2012.”
The drought in the United States, the world’s biggest grain and oilseed exporter, sent corn and soybean prices to records earlier this year and wheat to a four-year high. Incomes for crop farmers were forecast to rise in the next six months, according to 48 percent of survey respondents, while 72 percent of bankers said earnings will fall for hog and cattle producers.
Farmland values in Iowa, the biggest producer of corn and soybeans, rose 18 percent from a year earlier, according to Fed data. Illinois gained 15 percent, Indiana rose 11 percent, Wisconsin increased 8 percent, and Michigan advanced 7 percent. More than half of the bankers said farmers will seek to buy more land in the next six months.