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Senior Contributor
Posts: 900
Registered: ‎01-03-2015
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Ag Reset

Some talk below bout an ag reset, declining land values etc in the future.
Has anyone done any cycle research as to when one could occur and what might be the catlyst.
3.50 corn doesn't buy much land on my world , however land values are still firm.
It would take at least 3 years of sub 3 dollar corn in my book to see land values decline 20%.
Big crop,big carryout, plc and arc fading away , maybe ethanol gets,wacked, suppose its possible. Perfect storm!
Advisor
Posts: 688
Registered: ‎10-18-2016
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Re: Ag Reset

I haven't seen any research and don't have an opinion, except that your scenario feels about right.

Honored Advisor
Posts: 14,388
Registered: ‎05-13-2010
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Re: Ag Reset

Just my observation (so I can be wrong) what I see is a tremendous amount of off-farm capital in and coming in to farming and land purchases, Iowa farmland actually went up a percent or 2, for first time in 2,3yrs, so it`s a sign of a bottom.  This outside money or pent up old money buys into "9 billion world population by 2050", in other words grandpa wants to leave junior a legacy of being one of the food supply monopolies in that brave new world.  I don`t know how demographics, politics and property taxes play into their equations, but it must be their thought process.

 

So, I don`t know if $3.50 or $3 corn plays into their bidding price or not, they`re thinking long term.  The 30yr old, new money hotshot might cry "uncle", but those that stroll into local eateries and pull out a roll of C-notes and pays the entire patron`s bills and drive off in his convertible ...I don`t know as they will back down at the land auctions.   There is one heck of a lot of money out there, never seses to amaze me.

Honored Advisor
Posts: 7,303
Registered: ‎07-18-2011
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Re: Ag Reset

on the southern fringe we are seeing land values down at least 20%....  In some areas water value is still high but the land value is not where it was.

And a lot is being sold and offered..... and no saled.

 

I think the 2008 hangover is still here and that keeps land in the investor mind.  It is hard to find private sector profits that are not tied to a government project or tax advantage. 

 

 An ever increasing amount of farm land is within development speculation range of a decent sized city....  most of the corn belt.  I think that factors in .

 

  All business continues to struggle against the internet.  And those who look profitable on the internet are still living off potential and tax avoidance.  

I haven't seen UPS sponsoring the local HS sporting events yet, even though in a lot of small towns they are delivering more sales than the store fronts who do sponsor.

 

 

 

 

Honored Advisor
Posts: 14,388
Registered: ‎05-13-2010
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Re: Ag Reset

No doubt the fringe will be the first to feel the pain...and maybe they still have some pain to go.  I mean if the basis is $1.50 under or whatever ElCheapo says and the towns losing population so not much need for construction work and such, there wouldn`t be that readily available source of outside money coming in...oh "oil wells" maybe, but they got it tough as agriculture.

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Frequent Contributor
Posts: 37
Registered: ‎09-27-2010
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Re: Ag Reset

Old money buys most land not the current price of corn.