Cropland prices in Iowa, Nebraska, South Dakota and Wyoming declined some in the final six months of 2014, while demand for pastureland remained strong.
The latest benchmark farm values and sales data tracked by Farm Credit Services of America (FCSAmerica) continue to point to a "soft landing" for farmland after years of price increases.
FCSAmerica releases its farmland study every January and July, using sales records and its 64 benchmark farms to compile the largest database of land values in the four states.
Fifteen of the 21 benchmark farms tracked by FCSAmerica in Iowa decreased in value during the past year, with an average drop of 8.8 percent. Only one benchmark farm increased in value. As a whole, Iowa benchmark farm values were down 6.1 percent in January 2015 compared to July 2014. This follows 10 years of rising land prices, with farmland values still up 196 percent. In areas of Iowa, sale prices remain near historical highs. The highest sale in the fourth quarter of 2014 was $15,300 per acre in Plymouth County.
Benchmark farm values decreased 1.7 percent in the last six months of 2014 and were down 0.2 percent in January 2015 compared to January 2014. Five of the 18 benchmark farms increased in value, while four remained unchanged. Nebraska farmland values remain up nearly 290 percent compared to 10 years ago.
Values on 13 of the 23 benchmark farms increased or remained unchanged in the final six months of 2014. As a whole, benchmark values were up 2 percent in the last half of 2014 and 7.8 percent for the year. Farmland values have increased more than 280 percent during the past decade.
Values on benchmark farms were up nearly 7 percent compared to the end of 2013, driven by strong beef calf prices and returns.
The decline in land values reflects softening in the cropland market following significant drops in grain prices. As corn prices settle at about $3.50 to $4.00 per bushel, profitability on higher-priced land is top of mind for many producers, putting downward pressure on cropland prices and cash rents. Cropland prices in the final six months of 2014 fell 7.1 percent in Iowa; 4.8 percent in Nebraska; and 4.6 percent in South Dakota.
By comparison, strong livestock prices increased demand for pastureland in each of FCSAmerica's four states. Prices for pastureland rose 0.2 percent in Iowa; 5.9 percent in Nebraska; 4.8 percent in South Dakota; and 1.7 percent in Wyoming.
FCSAmerica also tracks public land auctions. In 2014, the number of public farmland auctions fell 10 percent in Iowa and 12 percent in Nebraska. Only South Dakota saw an increase in the number of land auctions - about 8 percent more than in 2013.