Land prices in Missouri increased in the past year at a rate higher than expected.
Results of the 2014 University of Missouri Extension annual land value survey of lenders, appraisers and brokers showed an increase for cropland values by 4.6 percent, nearly double what survey respondents predicted last year.
“That’s a bit surprising given the weakness in crop prices,” says Ron Plain, University of Missouri Extension agricultural economist. “The days of $6 and $7 a bushel corn are behind us, with corn prices headed toward $3 a bushel and maybe in some spots a little bit lower.”
Pastureland values increased by 7.2 percent over the 2013 level, which is more than five times as much as last year’s survey predicted. However, Plain says, that is not as surprising as the steep increase in cropland, because the cattle prices have been a lot higher than anticipated.
With the huge drop in crop prices, survey respondents figure sooner or later that is going to push cropland values down.
“They predict cropland value will be down 1.2 percent in July of 2015 compared to July of 2014,” Plain says. “On the other hand, cattle prices are looking strong, so higher pastureland values were forecast, with the average of respondents estimating it up 2.2 percent next year compared to this year.”
Plain says there is every reason to think that cropland rent will come under pressure due to lower crop prices. He says we could be in for several years of lower cropland prices.
“On the cattle side of it, it is looking awfully good and expected to be better if possible in 2015,” Plain says. “So I don’t see much of a reason for pastureland values to stop going up anytime soon.”
MU Extension has conducted the annual survey for the past 40 years to keep track of what is happening to farmland values in Missouri. Plain says over the years the survey has matched up very well with the numbers that USDA has in its annual report.
See survey results at http://agebb.missouri.edu/mgt/landsurv/.