Farmland sales are generally starting to slow down late this summer. Randy Dickhut, a farmland sales expert with Agricultural Economic Insights, says there are two reasons activity is slowing down.
He says, “One would be that it’s normal this time of year, through this post-planting into the summer and leading up towards that pre-harvest time, it does slow down. There still are auctions going on year-round and every month of the year. They didn’t used to be for various reasons, but they are now. Secondly, I think it’s just natural that when there’s more activity in a market, it’s naturally going to take a breather and slow down some. Kind of like what we saw in that 2012-2013 timeframe, those prices went up, and you had someone who was thinking about selling. They decide, ‘I think I will go out and sell.’ So those jump into the market, get sold on that way out, typically, and then that’s taken care of. And so, we back on down to the natural sale level.”
Prices in the farmland market seem to be cooling off a bit. Dickhut says, “We’re not seeing those new records being set that we saw, especially in Iowa. We saw new highs in Illinois elsewhere. North Dakota land was selling for over $13,000 acre, things like that. Those have pretty well stopped. There might still be a rare occasion when those neighbors who really want it will over-bid on it, but not right now. Higher interest rates have pulled back on that, even for farmers that have the cash or something, I think, got a little more cautious.”
With predicted lower commodity prices in the months ahead, Dickhut says farmers will likely continue to be more cautious about land purchases.
He says, “I contend that if you’re really thinking about what you’re going to pay for that farm, you’ve got to consider the income it’s going to generate over those coming years, and right now, 2023 grain prices don’t look as good as 2021 and 2022 and on down the line. The different forecasts are it probably won’t be quite as good as the previous few years, which again, makes sense. It’s cyclical.”
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