Farmland values hold steady

WABASH, Ind. — In spite of fluctuations in commodity prices, farmland values remain steady, said Howard Halderman, president of the Halderman Farm Management and Real Estate Services, during a webinar.

“If you have an above-average farm, it’s going to hold value and be a very solid asset for you,” he said. “If you have an average to below-average farm, that’s where we’re going to see a few more struggles.”

According to Halderman, farmland values are impacted by three major things: farm incomes, supply of farms for sale and the interest rate impact.

Farm Incomes

“Farm incomes right now are bearish,” Halderman said. “We’re looking at corn and soybean prices down three straight days. They’re trading at levels that are below cost of production.

“We’re looking at farm income projections for 2024 that are well off from where we were the past three years. So, right now farm incomes are somewhat bearish to farmland values.

“From a production standpoint, things look good at this point in time. Our moisture is pretty decent. So, it’s really all about prices and what those commodity prices do.

“Could we get in July a weather scare? Could we get to $5 corn in the next 30 days and have the opportunity to sell the remainder of last year’s and some of the 2024 crop at a nice price? Certainly. However, (based on the Purdue University/CME Group Ag Economy Barometer), there’s a concern about farm incomes being off.”

Interest Rates

“I think the interest rate impact is neutral because we’ve stabilized at these rates,” Halderman said. “They are higher rates. They’re not historically high, but they’re higher than a couple of years ago. Hopefully, we see some relief there, but I don’t think anybody is planning on that immediately.”

Supply

“The third factor is supply. That’s been the bullish factor. The acreage for sale, the transactional volume, is below normal. That’s been consistent for the last 10 years,” Halderman said.

“But every fall we see a flush of farms come on the market in October, November, December. Then it kinds of slows down in the first quarter. That’s been true the first five or six months of this year. That’s supportive of farmland values.”