One year ago, the agriculture industry continued to witness the decline in commodity prices. The question was, is this the end of the boom we have been living in the last seven years? The price of farm ground was holding fairly steady and the income from the year before was still in the rearview mirror, hoping this was just a dip in prices and that prices would firm up and stay in a $4.00 trading range. Spring of 2016 told a story of a slight decline in farm ground, however some top quality farms still sold for a solid amount. As the planters rolled the farm sales stopped, which is typical this time of year. In the agricultural Real Estate business, most farms were selling by auction and listings were at a minimum. We were, however, starting to see listings, which was an attempt to hold up the price of farm ground.
Today as I write this, we have seen the price of commodities drop again, down to a level we have not seen since 2007. As an agent, we are being asked the question “Where is the price of farm ground headed?” All indicators tell us the obvious, they are heading down. This is good news for buyers bad news for sellers. I see it this way, if you are wanting to sell land and get a good price, all indications say the sooner the better. Many buyers still have cash in the bank and are willing to still pay a good price for good farm ground. There is no way anyone knows what will happen. All we can go by is what the indicators are telling us as well as history. All commodities are down; oil, scrap metal and grains. We are guessing that we are heading back to business as usual in agriculture, back to grain trading in a two to three dollar range and not a five, six or seven dollar range. With another bumper crop coming in this fall, we will see downward pressure on prices.
When the time comes to sell a property, it is like a farmer selling grain, very, very few will sell at the top of the market. Selling in a down trend is like trying to catch a falling knife. As a seller, you have to make the decision, have an exit plan on what to do with the money and follow through. At this point in the market, it is better to be the seller of the start on a downward trend, than to wait and be a seller at the bottom.
If you know anyone wanting to liquidate farm land, feel free to give me a call or email and we can visit.