Farmland sales throughout Minnesota and the Upper Midwest during the ﬁrst quarter of 2019 have been all over the map and current listings are no exception. Nevertheless, high quality farmland remains strong although it has softened a bit in almost every region. Meanwhile, lower quality farmland is down as much as 20-25% since its peak in 2012.
In West Central Minnesota a 320 acre (+-) parcel with an average CPI of 84.3 is currently on the market for 7,300 per acre. West Central Minnesota farmland north of Renville and Sibley County is typically lower in price, but this listing is an example of high quality tracts of farmland continuing to hold their own regardless of where they are located.
For now land prices appear to have stabilized, but that could soon change and send the market in either a positive or negative direction depending on the outcome of the pending US-China trade negotiations. High yields have helped farmers oﬀ set the negative commodity prices over the past few years, but no matter how you add up the numbers, farmers have been stressed by low prices.
As of today, the low commodity prices are continuing to aﬀect the price of farmland. The current price for corn at most local elevators is around $3.20 a bushel and this has many farmers understandably on edge. Fall corn prices aren’t much better at $3.37 a bushel. Soybeans are currently selling for around $8.10 a bushel at local elevators while fall soybeans are hovering at around $8.50 a bushel.
Low milk prices are another negative factor that continues to cool the farm economy and land prices. Dairy farmers selling class IV milk ﬁnally edged up close to $16.00 a hundred in March, but milk prices, like the corn and soybean prices, still have a long way to go before farmers can avoid the red. Despite the negative prices, positive signs are on the horizon and the new farm program helps dairy farmers milking less than 250 cows. The trade deal with Canada most likely will not have much of an impact on dairy farmers, but it was necessary and long overdue. On the other hand, it’s another story in Asia, according to the U.S. Dairy Export Council, USDA, in 2018 the United States exported 16.6 percent of U.S. milk production on a total milk solid basis, the highest ﬁgure ever with a one year 49% increase in exports to China and a 41% increase in exports to Japan over 2017.
With spring planting just around the corner many farmers are understandably concerned about the current markets. According to Iowa State University’s 2019 input cost analysis, on average to obtain 200 bushel corn farmers will spend $775.17 per acre for input costs, and to break even in the fall they will need to receive at least $3.88 a bushel for their corn.
The current trade negotiations with China will undoubtedly have a major impact on the fall markets. A positive trade deal with China may just be the ticket for a proﬁtable 2019 harvest. On the other hand, a bad deal, or no deal, could have a devastating eﬀect on the farm economy.
Outside of farming the national economy remains strong for outside investors interested in farmland. Low unemployment, low interest rates, and a robust economy are positive signs for local investors seeking hunting and/or recreational land, or the perfect spot to build their dream home.
Besides the Twin Cities, the greater Winona, Rochester, and Mankato areas remain very strong with the Mayo Clinic bringing in more medical personnel every year. Rochester and Winona area buyers looking to leave the city life for a more peaceful country environment show continued interest in the rolling hills north of Rochester to Red Wing along the Mississippi River through Winona and down to the Iowa border.
Houston, Fillmore, Winona, Wabasha, Goodhue, and Olmsted counties with their beautiful rolling terrain and rivers keep buyers constantly on the lookout for the perfect piece of land to build their dream home. Another hot spot is the beautiful Minnesota River Valley. As always, it continues to be a highly desired area from Mankato up to the Twin Cities, and the high quality farmland north, south, east, and west of Blue Earth County remains strong despite a slight decline overall.
Buyers within commuting distance of Rochester, Winona, and Mankato continue to seek hobby farms and smaller parcels of land in respected school districts with smaller communities. The small town way of life is more popular than ever.
For a free market analysis of your farmland call Mike Keefe.