Fall is the favorite time of the year for many people in agriculture, the chance to see the results of a year’s worth of effort and investment. This year we have had to wait a little longer to see these results. By late October soybean harvest had progressed at about a ten-day slower than normal pace but was nearing completion. Corn harvest was about one-half done. We have not been without our weather challenges this fall. From early September to early October many areas of Northwest Iowa received 7 to 10 inches of rain, which is over twice the normal amount expected, on top of what was already wet soil. This slowed harvest progress and caused some moderate crop loss in the worst affected areas. The soil profile is saturated and we will likely be dealing with muddy fields through the rest of the fall. Unusually high humidity has also slowed soybean harvest.
Sales activity is picking up as we’re into the “land selling season”. That’s generally the second half of the year with increasing activity each month into mid-December. January to March can also be quite active. Sales results have been very good for the most part. A number of sales have occurred recently with most of the activity happening to the east or southeast of Storm Lake and also to the northwest. To the east, we’ve seen a number of parcels, mainly 80’s and some 160’s, selling in the $8,500 to $9,500 per acre range with a top end of $9,900. These are strong sales for this area, considering the length of the downturn in crop prices. Lower-quality farms are in the $5,000 to $6,500 range.
Aerial photography has been a farm management and real estate tool for many years. We have occasionally hired local pilots to take flights to check on damage to an area affected by wind storms or excessive rain. We also have taken aerial photos of farm real estate listings with unique features that can best be appreciated from above. Downside to manned flights include being at the mercy of weather and pilot availability. Satellite photos are also available for all farms. These have been an excellent resource, but are low resolution and typically only updated on a yearly basis, and are of limited value for in-season management decisions.
When talking lease terms, you generally think cash rent. While cash rent leases are popular with many of our owners, they actually account for fewer than half of the acres we manage. The main attractions of cash rent leases are that cash flow is a known amount, and that there is very little perceived risk. However, the other popular alternatives are a better fit for many clients
Our Summer newsletter included an article studying longterm cycles in corn prices. This article will look at more recent trends as prices rise and fall during the ethanol era. The ethanol era can be traced to October 2006. On September 20, 2006, cash corn price at one of our local elevators was $1.99 per bushel, the last time we’ve had sub- $2.00 corn. By November 3, 2006, that elevator exceeded $3.00 per bushel and prices have since had few days below $3.00. Most of those sub-$3.00 days have occurred these past several months as the weight of our fourth straight year of record production is coming to fruition. As a reminder, the good old days of October 2005 saw an average cash price of $1.43 (plus LDP’s!).