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​WallacesFarmer | ​November 14, 2018

Various factors affect demand for land

Crop yields, interest rates, tariff situation and negotiation of new farm bill lead the list.
The land market that otherwise faces some headwinds, including higher interest rates, relatively weak commodity prices and significant trade uncertainties. Localized differences in yield results are playing a slightly larger role in farmland sale results this fall and early winter. Early-season sales already reflect this uneven trend. In areas where another big crop was produced, there is more strength and overall stability in the land market, even in the face of lower grain prices. Essentially, these big production areas are “out-busheling” the weakness in crop prices, per se. However, in local areas where crop yields were average or below, there is more noticeable softness in the land market. Regardless of the area, high-quality farms with the most productive soils, solid drainage, easy farm ability and strong fertility continue to sell best. And despite some negative factors in the land market, farmers continue to pursue acquisition opportunities when they make sense to the core operation of their business.

Understanding Today’s Land Market

Pay special attention to current issues affecting land prices.
First, learn whether the area you are interested in had strong or weak crop production in 2018. Production success or disappointment from area to area has set the mood in the countryside in the current sales season.

Second, keep an eye on increasing interest rates, as higher rates will continue to pressure farmland values. The Federal Reserve is expected to again raise short-term rates at their December meeting, which follows a consistent pattern of bumping up short-term rates since late 2016. While short-term rates don’t directly impact long-term borrowing costs, short-term rates quite directly impact farm operating notes, which are now squarely in focus as we are in operating loan renewal season. And since early fall, long-term rates have appreciably increased for the first time in many years.

Third, disruption in the commodity markets by the enactment of global trade tariffs is real and has softened U.S. grain markets. How global trade negotiations play out in the weeks and months ahead will continue to impact commodity prices, market confidence and, ultimately, underlying asset values, including farmland.

Crop insurance, new farm bill
As we approach the 2019 growing season there will be a reset in crop insurance price levels for 2019. If things don’t change in the grain markets, these revenue policy price levels will reset to significantly lower levels for 2019 production and will add more pressure to an already stressed market. Finally, negotiations continue the new farm bill in the current lame-duck Congress. Any new farm bill policies will likely impact the countryside for the next several years.

Success Stories

"Hughes Real Estate went above and beyond in helping us get our aunt's property prepped and ready for sale. This included a house in town and farm land. They provided invaluable local expertise and were very professional and friendly. My family would recommend Hughes Real Estate with no reservations." Family of Millie H.
"Our family sold a fairly large parcel of farmland in Stevens County, Minnesota. It was a complicated property with different land characteristics and an existing CRP contract. We were very pleased with Jesse's representation. He had a lot of expertise and guided us through the different dynamics and options for selling the property. We highly recommend him." Jim J. and Karen H.
"Thank you for all you have done helping us sell our home, Sonia. It was a pleasure working with you! Best of luck in your future, you are an excellent realtor!" Mervin and Carole S.
"Sonia, Thank you so much for all you have done for us while we searched for the perfect home, with you we found it! We will refer you to everyone we know that is looking for a new home!" Jon and Missy R.
"Sonia, Thank you so much for the amazing job you did helping us find a home. You were very patient and listened to what we were looking for !" Mark and Karla H
"I was very satisfied with Sherry’s performance as my Realtor, everything was great on her behalf. Thanks again, Sherry!" Bob M.
"Jesse was our real estate agent when we decided to sell our home. He came to our first appointment well prepared with area statistics on houses for sale, houses similar to ours and helped us easily come up with a selling price. Jesse was able to answer all our questions with accurate information. He listed our house on a Thursday morning and had the first showing two days later. This showing resulted in the sale" Shawn and Holly Rodahl Benson, MN
"The synopsis of our experience is that we, either as individuals, or as a family would recommend and/or hire Jesse Hughes a heartbeat. He’s that good, and your experience with him will be top shelf from start to finish and beyond. He’s earned a glowing review from us and here is how; After the passing of our parents, we 5 siblings were beyond fortunate, and inherited the family farm, the “home place” if you will," Eileen F, Maxine B, Maureen B, Clif P, & Joyce S.
"To whom it may concern: I contacted Hughes Real Estate/ Jesse Hughes regarding WRP/RIM land I wanted to sell. Mr. Hughes was very prompt in returning my call and set up an appointment to meet with me. I was very pleased with his knowledge regarding the WRP/RIM property. He was professional and courteous. I listed the property with him and we got the property sold." Larry A. Maiers
"I am glad to give you an honest referral as it relates to you selling my 141 hunting acres. I found you to be highly motivated in finding a buyer for my property, and once we had an offer you were always on top of the paperwork and made sure we had a quick and thorough closing…with NO SURPRISES! As a Sales Training Consultant my entire life, I didn’t miss your sincere appreciation after the" Larry J.