Grain Prices, Demand Drive Indiana Farmland Values ​​High – Inside Indiana Business

The headquarters of the Seventh Federal Reserve Bank in Chicago. (photo provided)

A policy adviser and veteran economist at the Seventh Federal Reserve Bank in Chicago says the rising values ​​of Indiana’s farmland are mostly due to rising grain prices, but he says values ​​are catching up in the Indiana market as well. David Oppedahl is the author of the Chicago Fed’s Quarterly Agricultural Letter, which tracks farmland values ​​and credit conditions. The third quarter report shows that the value of quality farmland in Indiana is 29% higher than the same period last year.

“I think the biggest factor in the value of farmland in Indiana is that they’re seeing the big profit increases in corn and soybeans,” Oppedahl said in an interview with Inside INdiana Business. “Even though input costs have increased a bit, it’s still a pretty good year overall.”

According to the Chicago Fed, September’s corn price was 2% lower than August, but still 30% higher than a year ago. Likewise, Oppedahl says the price of soybeans in September was 8% lower than in August but 16% higher than a year earlier.

According to Oppedahl, Indiana is catching up with other major corn-producing states in the Midwest, namely Illinois and Iowa.

“Indiana had slightly lower growth in the first part of the year compared to, for example, Iowa,” explained Oppedahl. “Illinois is kind of in the middle between those two, and their farmland values ​​have traditionally been higher. So in Indiana, with slightly lower farmland values, there could be some kind of catch-up mechanic.”

LISTEN: In an interview with Inside INdiana business reporter Wes Mills, Oppedahl says Indiana saw slightly lower earnings in early 2022.

Indiana posted the largest year-over-year increase in the entire Chicago Fed’s Midwest region, which includes all or part of Indiana, Illinois, Iowa, Michigan and Wisconsin.

Across the district, farmland values ​​increased 20% year over year in the third quarter of 2022.

David Oppedahl is Policy Advisor to the Seventh Federal Reserve Bank in Chicago. (photo provided)

In August, the Purdue Farmland Value and Cash Rents Survey showed that Indiana farmland prices rose at a record pace between June 2021 and June 2022, surpassing previous 2021 highs. Statewide, top-quality farmland averaged $12,808 per acre, up nearly 31% from the same time last year.

“Several factors are driving increases in farmland prices, including positive farmer net incomes, relatively strong commodity prices, inflation and high farmer liquidity,” Todd Kuethe, Purdue Associate Professor of Farmland Economics Todd Kuethe, said in the August news release.

Oppedahl says farmers are acquiring land to expand their operations, but they often compete with outside investors looking for a hedge against inflation.

“It’s still a time when both farmers and non-farmers have a greater interest in buying farmland, even at these high prices. And I think that helped keep some of that momentum going,” Oppedahl said. And maybe a little more on the investor side because… after seeing such strong gains and struggles in other investment vehicles. So now they’re like, ‘Oh, we really should look at farmland.’”

The report is based on survey responses from approximately 160 bankers in the five-state region who serve an agricultural clientele.

Oppedahl says 25% of bankers surveyed expect farmland values ​​in the district to rise again in the fourth quarter of this year, 7% expect them to fall and about two-thirds of respondents say prices will remain stable .

“There definitely seems to be some sense that there will be a continuation of the rise in agricultural values. The majority say no change…that we will see more stable farmland values, but there are more who see farmland values ​​rising and falling,” Oppedahl said to the top.”