US farmland prices have continued their downward trend to start 2018, but the pace of decline has slowed, a university study showed, in the latest of a series of reports hinting that the market downturn may be passed its worst.
A farmland index compiled by Creighton University came in at 42.2 for January, remaining below the 50.0 level indicating a neutral market, but up 2.4 points month on month.
Indeed, the figure was the highest for any month since July 2014, in the early stages of the farmland price slide which, on Creighton figures, has continued unbroken for a little over four years.
January was the “50th straight month the index has fallen below growth neutral,” said the university, which draws its report from a survey of lenders in major agricultural states, from North Dakota to Colorado.
‘Values are holding’
Still, the data revealed broad improvement in values, with index figures rising for all states covered bar one, Minnesota, which reported only a small decline, of 1.4 points to 41.1.
Pete Haddeland, chief executive of First National Bank in Mahnomen, Minnesota, told Creighton that “farmland values are holding in our area”.
Such comments tally with other evidence too of a flatter market, with the Federal Reserve’s Chicago bank, for instance, in November reporting that in its area, which includes main Corn Belt states, “such relative stability in farmland values had not occurred… since 1970”.
Two weeks ago, the Fed’s Dallas bank reported a tumble in irrigated land prices, by 3.8% quarter on quarter, but gains of 0.8% in ranchland values, and of 2.2% in dryland prices.
And on the outlook for prices among lenders surveyed, the Dallas Fed said that “the anticipated trend in the farmland values index remained positive for a third consecutive quarter, suggesting respondents expect farmland values to trend up in the upcoming months”.
Last week, farm management company Farmers National said that prices last year had risen in seven major agricultural states – including the so-called “I” states, Illinois, Indiana, Iowa – held steady in a further seven, including Oklahoma, Tennessee and Texas, while falling in Kansas, Michigan, Nebraska and Ohio.
“We think this is just kind of a stabilising time,” Randy Dickhut, senior vice president of real estate operations for Farmers National, told the Omaha World Herald.
However, the underlying momentum remained downward he adding, saying that ““I’d still say there’s a trend that it will soften more.
“We don’t think we’re done going down.”