Midwest Farmland Rose 6% in Second Quarter
(Bloomberg) Farmland values in one of the most productive regions in the Midwest rose 6 percent in the second quarter as higher grain prices made real estate more attractive, the Federal Reserve Bank of Chicago said.
Increasing demand for wheat, corn and soybeans boosted earnings, supporting higher land prices in the five-state Seventh Federal Reserve District for the third consecutive quarter, according to the report. Gains were reported in Illinois, Indiana and Iowa. Wisconsin had a decline while data from Michigan were inconclusive.
Iowa farmland values rose 8 percent, Illinois had a 5 percent jump and Indiana 4 percent. The drop in Wisconsin reflected reduced dairy profitability, according to the report.
“Location has been a major determinant for farmland values this year,” David Oppedahl, a business economist at the Fed, said in the report. “There have been reports of prices boosted by bidding between farmers for desired parcels of farmland. However, higher quality land has tended to gain the most in value over the longer term.”
Percent Change in Dollar Value of "Good" Farmland
Credit conditions improved in parts of the district during the quarter, as an index for loan demand rose to 98 from 88 a year earlier. The average for loan-to-deposit ratios at commercial banks in the district advanced to 74.5 percent from 73.7 percent in the previous quarter. The figure fell from 77.3 percent a year earlier, as lending increased from the government-funded Farm Credit System, Oppedahl said in a report.
Interest rates for agricultural loans in the second quarter fell. The average was 6.12 percent on new operating loans, down from 6.18 percent in the year-earlier quarter and down 260 basis points from the most recent peak four years earlier. Real estate-loan rates averaged 5.99 percent, down from 6.16 percent a year earlier, the Chicago Fed said.
About 85 percent of 198 agricultural bankers surveyed expected stable farmland prices in the current quarter.
http://www.businessweek.com/news/2010-08-26/midwest-farmland-rose-6-in-second-quarter-fed-says.html
Increasing demand for wheat, corn and soybeans boosted earnings, supporting higher land prices in the five-state Seventh Federal Reserve District for the third consecutive quarter, according to the report. Gains were reported in Illinois, Indiana and Iowa. Wisconsin had a decline while data from Michigan were inconclusive.
Iowa farmland values rose 8 percent, Illinois had a 5 percent jump and Indiana 4 percent. The drop in Wisconsin reflected reduced dairy profitability, according to the report.
“Location has been a major determinant for farmland values this year,” David Oppedahl, a business economist at the Fed, said in the report. “There have been reports of prices boosted by bidding between farmers for desired parcels of farmland. However, higher quality land has tended to gain the most in value over the longer term.”
Percent Change in Dollar Value of "Good" Farmland
Credit conditions improved in parts of the district during the quarter, as an index for loan demand rose to 98 from 88 a year earlier. The average for loan-to-deposit ratios at commercial banks in the district advanced to 74.5 percent from 73.7 percent in the previous quarter. The figure fell from 77.3 percent a year earlier, as lending increased from the government-funded Farm Credit System, Oppedahl said in a report.
Interest rates for agricultural loans in the second quarter fell. The average was 6.12 percent on new operating loans, down from 6.18 percent in the year-earlier quarter and down 260 basis points from the most recent peak four years earlier. Real estate-loan rates averaged 5.99 percent, down from 6.16 percent a year earlier, the Chicago Fed said.
About 85 percent of 198 agricultural bankers surveyed expected stable farmland prices in the current quarter.
http://www.businessweek.com/news/2010-08-26/midwest-farmland-rose-6-in-second-quarter-fed-says.html
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