US farmland prices are falling again this month, and are now down 9.5% year on year – but the rate of decline is slowing, amid the recovery in commodity prices.
An index of farmland prices in major US agricultural states, from Minnesota to Colorado, compiled by Creighton University came in at 32.3 points for June – remaining for a 31st successive month below the 50-point level which indicates a neutral market.
“Over the past 12 months, farm prices are down by 9.5%,” said Ernie Goss, the Creighton University economics professor in charge of the survey.
Assuming an average price of $3,020 per acre, as calculated by the US Department of Agriculture for last year, the decline is equivalent to nearly $290 per acre – or some $290bn in terms of the value lost from the total US farmland portfolio.
Iowa prices return to growth
However, the rate of price decline shown by the Creighton index was slower than the 28.4 seen last month.
Indeed, June’s figure was the strongest reading in seven months, and well above the recent low of 20.2 recorded in March.
The price index for Iowa, whose market is closely-watched, being the top corn and soybean growing state, rose by 4.2 points from the May reading of 47.3 – meaning it moved above 50 and back into territory indicating price appreciation.
According to central bank data, Iowa prices fell in 2015 for a third calendar year, and extended their losses in the January-to-March period of 2016, easing by 1% quarter on quarter.
Professor Goss flagged that “agriculture and energy commodity prices have increased recently”, although added that they remain “well below” year ago levels, down some 4% for grains, and 15% for livestock.
Creighton’s research revealed a less marked recovery in the farm equipment sector, where sales index rose by 2.1 points month on month but, at 12.8 points, remained a “dismal” reading.
“Weakness in farm income and low agriculture commodity prices continue to restrain the sale of agriculture equipment across the region,” Professor Goss said.
(Source – http://www.agrimoney.com/news/us-land-price-slump-slows—helped-by-return-to-growth-in-iowa-values–9662.html)