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US crop returns slumps hits land prices

Farmland values have fallen for the first time in six years


Alex   Black

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Alex   Black
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US crop returns slumps hits land prices #clubhectare

Weak returns in the US corn belt have caused farmland values to fall, a new report has suggested.


US farmland prices have fallen for the first time in six years, real estate professionals said, flagging the weak market for investors and highlighting depreciation in wheat-growing country too.


US farmland values dropped by 0.2 per cent in the July-to-September 2016 period, the National Council of Real Estate Investment Fiduciaries (Ncreif) reported, slipping from the 0.7 per cent growth seen in the previous quarter.


"This was the first quarter with quarterly farmland depreciation since the third quarter 2010," the council said, flagging value declines in areas including the southern Plains, a major US wheat-growing area, and the corn belt, the focus of corn and soybean production.


In the corn belt, total returns – land price changes combined with income – came in a negative 3.5 per cent on an annual basis.


The report adds to the list of commentators who have flagged a depreciation in US land prices, a weak crop price and a lowering appeal of farm investment.


Separately, research by Creighton University showed prices falling for a 35th successive month, and at an accelerating rate.


Creighton’s land price index fell to 25 from 43 in September, falling even further below the 50.0 level which indicates a neutral market.

 


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Land prices expected to fall as supply overtakes demand Land prices expected to fall as supply overtakes demand

Machinery

What is the corn belt?

The corn belt consists of the Mid Wester American states of Iowa, Illinois, Indiana, southern Michigan, western Ohio, eastern Nebraska, eastern Kansas, southern Minnesota and parts of Missouri.

 

The university data, drawn from a survey of lenders, showed further weakness in the farm equipment market too, with a sector index easing to 13.1 points this month from 14.3 in September.


Ernie Goss, the Creighton economics professor in charge of the survey, said: "Weakness in farm income and low agricultural commodity prices continue to restrain the sale of agriculture equipment.


"This is having a significant and negative impact on both farm equipment dealers and agricultural equipment manufacturers."

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