According to Terry Kastens, an agricultural economist with Kansas State University, U.S. farmland prices are at a tipping point and although we will not see a crash, we might see a reduction of approximately 10% in farmland prices in 2014. As U.S. farmland recovers from last year’s drought, and this year’s corn harvest reaches 13.989 billion bushels, commodity prices are expected to flatten. Rents in some key corn and soybean producing states such as Iowa and Illinois may ease with some possible large decreases, however rents in risker growing regions such as the High Plains where production didn’t rally quite as much, rents may still increase. Farmland prices may increase once again if commodity prices surge pushing corn prices back to $7 and if crop output experiences a ‘massive consolidation’ then land values and rents may be higher in two to ten years. Land sales by farmers have increased because farmers with cash on hand are still buying, however interest from investors has cooled amid concerns that the market has peaked.
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