Weak crop prices continue to weigh on US farmland values

19.08.2016

US farm prices are still in the doldrums, as the Goss farmland index languishes below growth-neutral, for the 33rd straight month.

Low crop and cattle prices are weighing on the whole agricultural economy, said Ernie Goss, chair of Regional Economics at Creighton University.

"Over the past 12 months, farm prices have fallen by 11%, cattle prices are off by 22%, and grain prices are down by 20%," Dr Goss said.  

Bearish land price prospects

The Goss farmland and ranchland-price index for August slumped to 25.6, down from 31.3 in July, where any number below 50 indicates prices are falling.

The index has remained below growth neutral for 33 months in a row.

And there looks to be ongoing pain to come, as the rural bankers forecast that farmland prices would fall by another 6.9% over the next 12 months.

"However, as in previous months, there is a great deal of variation across the region in the direction and magnitude of farmland prices, with prices growing in some portions of the regions," Dr Goss noted.

Colorado was the outlier in the 10 rural states surveyed, as bankers turned positive on farm value prospects there.

Falling farm income hits equipment sales

Prospects across the whole rural economic sector are looking bearish, as the overall Rural Mainstreet index remained below growth neutral for the 12th month in a row.

"Weak agricultural commodity prices are pushing farm income lower and sinking the overall Rural Mainstreet economy," Dr Goss said.

 The August farm equipment-sales index increase, a touch, but remained extremely bearish, at just 14.8.

"Weakness in farm income and low agricultural commodity prices continue to restrain the sale of agriculture equipment across the region," said Dr Goss.


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