As the Midwest struggles with the ripple effects of this year's devastating drought, farmland prices in Iowa hit a new record high on Thursday when an 80.47-acre parcel sold for $21,900 an acre, the auction firm that handled the sale said Friday.
The parcel is located in Sioux County near Boyden, Iowa, about 42 miles southeast of Sioux Falls, South Dakota. The sale soared past last year's record price tag of $20,000 per acre which was set in an auction for a 74-acre parcel held in the same county in northwest Iowa.
Thursday's buyers were neighboring farmers, said a spokesman for Vander Werff and Associates Inc which ran the auction.
The sky-high prices underscore how demand for Iowa farmland has remained strong, given that commodity crop yields fared far better in the Hawkeye State than in other parts of the nation's Corn Belt this summer.
Given that crop prices hit historical highs this summer, these somewhat larger yields gave some Iowa farmers an economic boost and added to the record income levels they enjoyed in 2011, said Michael D. Duffy, professor of economics at Iowa State University.
Whether Iowa's land values will continue to rise, though, will depend on the weather, he said.
"If you look at what the prognosticators are saying that I look at, the predictions for corn prices range from $4 to $9," Duffy said. "If we get moisture this winter and spring, the prices will fall back for land. If we don't, they'll stay up."
Iowa farmland prices have risen steadily in recent years. The value of tillable land jumped an average of 7.7 percent in the state over the past six months, according to a recent farmland survey released by the Iowa Farm & Land Chapter #2 Realtors Land Institute.
The value of Iowa crop land for potential corn production increased nearly 21.9 percent over the 12 months ended in September, according to the survey.
Thursday's sale was far from an anomaly in Iowa in recent weeks. Earlier this week, a different piece of farm property sold for $19,100 in Sioux County, home to dairies, swine farms and livestock feed lots that need land to disperse the manure.
Earlier this month, a tract near Carroll, Iowa, reportedly sold for $16,000 per acre.
(Reporting By P.J. Huffstutter; editing by Jim Marshall)