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Land prices

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Well-known member
May 10, 2006
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Frankfort, Indiana
Read this article from Rueters in the Indiana Beef Assoc. news letter. This part of it. Are these idiots crazy?? How can this be profitable? IMO there will be a bubble burst and someone is going to get hung out to dry. I know that we have record prices for beef this year but input costs have margins lower for producers. We have a tendancy to think that feed prices will lower but with this economy consumers will not sustain demand with yet higher prices and we cannot depend on global demand. Even the biproducts such as distilers and soybean hulls which are a subsitute for whole grains for feed are high. How can livestock production be profitable with these conditions?

Cropland values in the Plains states rose more than 25 percent over the past year to a record high while ranchland values increased 14 percent, the Federal Reserve Bank of Kansas City said in its quarterly survey of 243 banks in the region. It was the fastest rise in cropland values in the survey's history.

Nebraska posted the strongest gains with irrigated and nonirrigated land values rising approximately 40 percent above year-ago levels, the Kansas City Fed said of the Plains states. Oklahoma, mired in one of its worst droughts ever, saw a gain of just over 10 percent, however.

Meanwhile, the price of farmland in the Midwest Corn Belt rose 25 percent in the third quarter, the biggest year-on-year jump in more than three decades, a survey by the Chicago Federal Reserve Bank showed.

The top U.S. corn-growing state of Iowa is seeing eye-popping prices, according to land brokers.

Last month, buyers of an 80 acre farm outside Des Moines paid $16,200 an acre for the row crop and pasture land, a staggering amount that surprised veteran land agent and auctioneer Jeffrey Obrecht of Farmers National Co in Iowa.

Ten years ago, farmland in the county was valued at $1,892 an acre, according to an annual Iowa State University survey.

"We had an opening bid of $10,000 an acre, and it kept going up and up and up," Obrecht said. "That was a lot, even for what we're seeing out here."
I don't think they are crazy at all. Land will prove to be a better investment than money in the bank over the long term no matter the price.
Oh I have always thought that but I'm talking about how can livestock production be substainable with these outragous land and feed prices? There is a political side to this as well as if the "greenies" get their way the boys out west will get their butts kicked out of the goverment owned lands and will loose that cheap grassland they are used to using so they will be under the same boat as the producers in crop areas.
They can't. Plow jockeys are moving in all around us here was kinda protected by the amount of rocks we have but one parcel I used to hay just had a trachoe,dozer and an endloader on it for 3 days digging and burying rocks now its plowed. It needed it but it's marginal soil at best but it's bigger and I forsee a center pivot in it's future.
I should have elaborated more as what this all boils down to is that the consumer has the final voice. Great - put land prices at $50,000 / acre and corn at $20 / bu but no one can afford to produce or will pay the price for meat and that high priced corn ground will set idle and nothing to pay the bills.
With land prices this high, commodity prices this high, and the republicans set to take over both chambers of Congress and the white house in 2012, I expect a major land price correction around 2012.

What I am predicting is going to happen is when the republicans pass the farm bill they are going to do away with the direct counter cyclical payments and just leave the ACRE program intact.

What will happen is all those land owners who have been holding paid for land, running a few head of cattle, and getting paid not to farm their crop bases will sell out since the main source of income has dried up.

The correction will not be gigantic, but I am thinking 10-25% less than the current price...that is of course only true if Europe is able to hold it all together, and the dollar does not collapse...if the dollar gets too weak, $20,000 may seem like a good price for an acre of crop land.

Im stock piling money with the hope of buying myself a nice big tract in 2012.
What happens if we have runaway inflation. Then you could pay off the land with inflated dollars. We are already seeing inflation heat up.
I'm hearing that some are hedging that there will be a bubble burst and in sooo deep, land prices will drop, and the bank won't be able to forclose because no one will pay the costs to purchase and the lenders will have no choice but to go along.
I personally know of one individual that did that here in the 60's.
I think it all depends when the bubble bursts. If someone buys land and there are a couple years of inflation and they can pay it off with 12 - 18 dollar corn, then maybe they did the right thing. But if the buble burst tommorow then they could be in deep do do. But it's like you said if the banks own too much land thenit changes. But the banks can only hold the land for so long before they will have to take their loss.
Another thing is if the person has cash to buy the land they are in a different situation than those borrowing to make the purchase.
Random thoughts--
What's still the world reserve currency, the u.s. dollar, is still fiat money and will most likely lose value.

While the u.s. is china's biggest 'creditor', due to the over a trillion $ of u.s. paper china is holding, it's also china's biggest customer---it has been in china's interest to prop up u.s. currency and keep relative currency ratio's outa whack.

This was done for china's interest, not u.s. My scenario yrs ago was that first china would eventually curtail investment in u.s. currency, fed debt===which they have. Then they would start to 'repatriate' u.s. $--when they were no longer so dependant on u.s. as a customer---they are spending big time--mainly to tie up basic commodities (i'm talking oil, iron ore, copper, potash, etc) world wide. And converting u.s. $ into 'real things' while it still has value.

Meanwhile---what is an investor to invest in? The general stock market has been a wreck, very volotile, always some damn thing, an unending string of 'crises'----and the sector I play, junior resource co's, primarilly Canadian---has been trading at levels that defy belief----like a legitimate little gold co, cash in the till, proven resources, good management, safe country----and it's stock price falls to a third, while the price of gold doubles??!! Resource World, a couple of yrs ago, had a list of 300 co's that were trading for less than the cash in the till.

Anyway---i did say it would be random!--I think there is a tremedous amount of investor money on the sidelines, there is a tremendous amount of investor fear and uncertainty, there is--or should be---a lot of lack of faith in the u.s. $----and land looks like fairly safe investment.
Population needs to drop...there's only one way to do that, and I'm of a mind to believe that our respective leaders and captains of industry came to that conclusion, and initiated plans for it LONG ago.

Keep your eye on the news and do what you can to hold on tight, cuz only the strongest (and smartest) will survive.
one of my larger, wealthier hay customers from the south, is seriously thinking about buying land here, and then i will just custom farm it for him. $6,000 /acre for pivot irrigated land seems like a steal to him. as long as I can crank 6 - 7 ton a year off of it in alfalfa.... the big money sees no fear i high land prices.
In my area they just sold irrigated land for $5,000/acre then a week later they sold dry land farm ground for $1,300/acre. The guy that owned the dry land bought it two years ago and paid $500/acre for it. Slot of it is driven by outside investors that driving the price. I bought some dry land last year and paid $600/acre for it and thought I paid to much.

Really want to go to a land sale up at valentine Nebraska a big land owner is selling a huge piece of ground pasture land and some farm ground. He has ground around my area. Here is a link to the sale bill.http://hallhall.com/auction-services/property-detail.php?id=511&cid=1
Land prices here in southern Ontario have gone a little silly as well. I think it is safe to say that it has more than doubled in the past 5 or 6 years. For instance, a 100 acre farm, 82 workable, that auctioned off for $325,000 about 5 years ago would now sell for around $800,000. The guy that bought it lost a few night's sleep at the time but now it's looking pretty smart.

If the neighbouring land is owned by a dairy or poultry farmer (supply manged commodities) 100 acres sells for $1,000,000 +/- . Or even more if one goes further south in the province. I don't have any such neighbours . . .

A broad range of $6,000 for plainer land to $15,000 per acre for the top land pretty well catches it.
I heard that Ted turner has ground that next to this place is that true? Somebody like that would buy it to keep it in one parcel.
If Turner buys the Circle Cross, I am pretty sure I WILL get to hunt buffalo. There is no way you could fence the river to hold them in.
From what I am hearing, there are a couple of out fits from Texas looking at it, that want to lease it back to a local rancher. There is a big outfit south of the ranch looking at it, plus all of us wanna bees.
Just my opinion, but I am not sure that it is necessarily a very feasable ranch. I have not been able to download the sale flyer but have an pretty good idea what is for sale. Out of the 12000 acres that are deeded, 3000 plus were just purchased. My inlaws leased that pasture, it is poorly developed. The water is poor the fences are worse and the corrals are non existent. The other 9000 acres should be exceptional, except for the fact that 7 miles of it is on the river. That means there is a possible 4400 acres that is nothing but water and trees. You can't graze trees and the day may come when you can not water out of the river. That leaves you with about 5000 acres of useable land, 1100 of which is irrigation,leaving less than 4000 acres of grass. The only lease that is certain is the National forest permit, it can only be filled with cattle you own, that eliminates someone speculating on being able to take cattle in to fill the ranch. It will be interesting.
Is some of it not that good of grass? Did they do more hunting/outfitting on it? I had a sale bill sent to me and it shows what looks like good metal working corals. But it was just one small picture. But it never says how many head of cattle they ran or could run.

We just think it's would be interesting to watch sale because the guy that owns it is from our area. He has so much dang money he doesn't know what to do with it and he is a a-hole. He got his butt in trouble over some irrigation's wells in Nebraska bypassing the flow meters. Not sure if this is why he is selling.

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