News

AFBF: Cash rents assessment

Cash rents are starting to come down on non-irrigated U.S. crop land – after record highs in 2015. But, American Farm Bureau’s director of market intelligence, John Newton, says there’s something holding those values in place, “It hasn’t come down as quick because land prices, the value of farm real estate, continues to be an attractive investment at these lower interest rates that we have today. So, we haven’t seen the value of farmland or cash rents come down near as much as one would expect with the lower commodity prices.”

Irrigated cropland values, he tells Brownfield Ag News, remain high…and so do highly productive land values – and cash rents – in some key Midwest states, “Illinois and parts of Iowa, there in the corn belt, do have the highest non-irrigated cash rents in the country – and that reflects the productivity of that good soil – there in central Illinois and parts of Iowa – where we often see the highest average corn and soybean yields in the country.”

At some point, Newton tells Brownfield, interest rates will have to go up, making land a less attractive investment. But he says something WILL have to give with cash rental rates next year,“As these commodity prices and farm income continues to remain at these lower levels, farmers are going to be hard-pressed to continue to bid at the current rates – and so, I would expect 2018 rental rates to come down even more, especially for that non-irrigated cropland.”

The USDA shows cash rents in some areas of Iowa and Illinois are above $250 per acre.