Currently harvest is proceeding well throughout the Corn Belt and Mid-South.  Dry weather ushered in an early harvest in some locations and certainly is helping it move along quickly.  Fortunately, yields are generally average to above, unfortunately crop prices for the major commodities are dismal at best.  What can we expect for land values in the Fourth Quarter with these concerns?

Of course, the bearish case is easy to make.  Farm incomes are down, way down.  Tariffs are hurting exports, especially soybeans and large yields are a drag as well on commodity prices. There are certainly concerns over cash flows, repayment of operating lines and many operators, upwards of 70%, think we are in a farm crisis!  With all the negative news one would expect farmland rents and values to trend down, much like we saw in 2014 and 2015.  Then farmland turned down 10-15%.  It could happen . . .

At the same time, the last 3 years the calendar year finished with a flourish and farmland increased into the year end.  Unknowns such as the election, or interest rate increases or yields all became knows and the market responded favorably.  What unknowns exist in the fall of 2025 that could turn favorably and help support farm land values?

• Yields – the late season dry weather created a drought in many areas. Some locations had too much rain in the early season.  Once yields become known and are better than expected this could provide some support.
• Prices – if, and it is a big if, China were to acquiesce and buy some soybeans as part of a trade deal we could quickly see prices recover. As of October 1, no sales to China when normally 25% head that direction.  Corn prices for US corn are the lowest in the world and that is having a positive impact of exports of corn.  I think the low is in for corn and there is upside potential for both crops if a trade deal is negotiated.
• Federal Support – if a trade deal does not materialize there is a growing sense the Federal Government will provide support payments, much like the Market Facilitation Payments of 2018. This additional income will help offset low prices and support lease rates and farm incomes.
• Interest Rates – the Federal Reserve lowered them .25% last month. There could be one or two more quarter point reductions.  Lower interest rates will help support land values.

All of these are possible and all could lend support to farmland values.  Through 9 months Halderman sales results show a steady trend near the all-time high values.  Additionally, farmland leases most likely remain steady, they are not at an all time high in inflation adjusted terms, as landowners seek consistent revenues to cover their additional costs.

Halderman knows farmland values inside and out, we know the market and how to maximize the value of your farmland asset. Please reach out to us at 800-424-2324 or www.halderman.com to explore what might be interesting to you.