Mark Twain might have been talking about the land market when he said, “Rumors of my demise have been greatly exaggerated!” Despite ongoing low grain prices which have reached the chronic stage, demand for good Iowa cropland remains strong. Part of the strength can be attributed to generally few offerings in a given locality over the past several years. With the wrap of another year, we examine our land sales database to see if the actual sale results agreed with the opinion surveys and other sources of land value information.
The 2017 growing season was one that we will not soon forget. Weather was far from perfect across the corn belt. Back in July and early August many “experts” were saying the US corn and soybean crops were in the worst condition since the drought of 2012. It seemed that achieving an average crop was unlikely at best, so who could have predicted that we would have the nation’s highest yielding corn crop on record at 176.6 bushels per acre. Soybean yields were at 49.1 bushels per acre-that’s 2.9 bushels below 2016’s record yield but increased acres resulted in the largest soybean crop ever at 4.39 billion bushels. It was an impressive crop nationally. Locally we saw lots of variability, but generally Northwest Iowa also had a very good crop in 2017.
We entered the 2017 crop season like we ended 2026, on a low price note. Local cash corn prices bottom at $2.90 per bushel and soybeans at $8.70 per bushel. October 2017 prices for both corn and soybeans averaged within pennies of October 2016 levels at just over $3.00 per bushel for corn and just under $9 per bushel for soybeans. Prices since harvest have acted remarkably similar as well. Current corn prices near $3.40 per bushel and soybeans near $9.80 per bushel are close to the last year’s levels at this time. Given the higher domestic carryover number is illustrated on the accompanying charts, this price action is actually encouraging. Why the strength? We are in the midst of a South America weather market. Most of Argentina’s Greenbelt has been locked in a hot, dry pattern over the last six weeks. Crop production estimates are starting to drop.
Changes are coming with the new tax law. Rules and regulations are being written to implement the many changes. The item that looks to benefit most in agriculture is in IRC section 199A in regards to income earned from other business activities. The two main things are deductions for qualified business income and deductions for qualified cooperative dividends. The leader of the two deductions is under considerable scrutiny. It was put in the bill at the last minute and gives cooperative members a 20% tax deduction for sales to a cooperative. This gives cooperatives an unintended advantage in buying products from producers versus non cooperative users for our commodities. We are told that a fix is coming in for this portion of the provision. Some private companies are exploring becoming coops in response to this legislation.
Chad Husman, AFM received the Early Career Award sponsored by the Iowa Chapter of the American Society of Farm Managers and Rural Appraisers (ASFMRA) Waited on February 1st, 2018 chad’s involvement with the ASFMRA includes serving on state level committees, as a member of the Board of Directors of the Education Foundation, and as delegate to the Leadership Institute. Chad has dedicated service to these chapter functions on top of his busy schedule of responsibilities in farm management and farm real estate sales. We congratulate Chad for this honor.
