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Is there a farmland bubble?

This is true, insurance saved a lot of guys last year, and I was one of the guys who received a check. I would have much rather produced 197 bushel corn. I would say most of your land that is going for 10-20k an acre right now is a situation where either two bidders sat and looked at the land their entire lives wishing they could buy it and now had to get into a bidding war to get it. And/or two guys with a too much money problem couldn't think of any other ideas on where to park their $$$. I think when interest rates go up and the Fed quits printing money like madmen we will see the commodity bubble slow down. This isn't something exclusive to farm land it is affecting everything from Gold to Corn. I just prefer golden kernels to the metal because kernels multiply. Here is Warren Buffet's take... " "What about gold? Is this a classic bubble or what?""Look," he says, with his usual confident laugh. "You could take all the gold that's ever been mined, and it would fill a cube 67 feet in each direction. For what that's worth at current gold prices, you could buy all -- not some -- all of the farmland in the United States. Plus, you could buy 10 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?"" http://money.cnn.com/2010/10/18/pf/investing/buffett_ben_stein.fortune/index.htm
 
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Farm ground

I love farmland as an investment, great asset to own, very good yearly dividend in the form of cash rent or crop income...possibly CRP

The key is to buy it right, the money is made at purchase, not at the sale!!!

To me some of this flat heavy soil is priced too high, and will correct. The marginal ground may actually go up a bit more.
 
I agree with both the last posts & Buffett's comments!!! I personally think all these guys buying Gold are tards!!!! crap hits the fan- I can produce food to feed an army on my land while others can play with their silly gold coins. I can't seriously believe how much advertisement is out there for gold while you don't hear a peep about buying land
 
Sligh
They are buying it and keeping it quiet. Glenn beck bought some somewhre also. Is the price of gas ever going to go down and stay down? Nope is corn going down to 1.50 ??? Nope
 
Land is as solid as any asset if you buy right. I was on a farm once in illinois that was going for 9 million.
Anyway they were planting trees that I know cost 10k a piece. They were so big I could not believe it. A couple of million to some of these guys is nothing.
 
India and china doesn’t buy corn from the US. South America raising a 5 billion plus soybean crop this year and with ethanol margins in the red the bubble will burst!
 
prices

promise land said:
India and china doesn’t buy corn from the US. South America raising a 5 billion plus soybean crop this year and with ethanol margins in the red the bubble will burst!
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More articles coming out in the past few days about the unlikely scenario of another dry year. If we get rain, corn prices will fall, less ethanol demand will play into it.

Also, Obama want to cut all farm subsidies and that would have some impact on land prices.
 
Throughout history the US has never had 3 consecutive years below trend line yields, we just had two in a row. Trend line for the 2013 crop is around 162, if they get the 100 million acres planted that would be around 92 million harvested which equates to 14.9 billion crop. Carry in is 632 that is 15.5 total supply. This year’s usage is estimated at 11.3 off 1 billion from last year, add the billion back on for next year that would give us a carry out next year of 3.2 billion bushels, which is sub 4 dollar corn. I’m sure if this would happen our demand would increase more than the billion bushels. I could ramble on about 4 or 5 hundred dollar cash rent and how breakevens on those acres are over $5 per bushel, but I won’t. All I’m saying is things could change with a big crop!
 
promise land said:
Throughout history the US has never had 3 consecutive years below trend line yields, we just had two in a row. Trend line for the 2013 crop is around 162, if they get the 100 million acres planted that would be around 92 million harvested which equates to 14.9 billion crop. Carry in is 632 that is 15.5 total supply. This year’s usage is estimated at 11.3 off 1 billion from last year, add the billion back on for next year that would give us a carry out next year of 3.2 billion bushels, which is sub 4 dollar corn. I’m sure if this would happen our demand would increase more than the billion bushels. I could ramble on about 4 or 5 hundred dollar cash rent and how breakevens on those acres are over $5 per bushel, but I won’t. All I’m saying is things could change with a big crop!
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Very interesting, I for one, would like to hear more if you care to share!!
 
promise land said:
India and china doesn’t buy corn from the US. South America raising a 5 billion plus soybean crop this year and with ethanol margins in the red the bubble will burst!
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Listening to the Big Show over the noon hour, they were talking how Brazil was having major problems getting their soybeans out due to their lack of infrastructure, causing Brazil's customers to look elsewhere to meet their demand (USA). So unless SA gets their crap together in the next few years and address their infrastructure problems, China/India will still look to us to fill their needs if SA can't.

I think the corn market will be much more volatile and subject to change.
 
Well, what is everyone’s opinion of the direction of the farm economy now? Feels to me that the crop is there and then some, don’t think we will see the USDA change much until the January report.
 
Plowboy68 said:
Listening to the Big Show over the noon hour, they were talking how Brazil was having major problems getting their soybeans out due to their lack of infrastructure, causing Brazil's customers to look elsewhere to meet their demand (USA). So unless SA gets their crap together in the next few years and address their infrastructure problems, China/India will still look to us to fill their needs if SA can't.

I think the corn market will be much more volatile and subject to change.
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Good to bring this one TTT.
Million experts and 999,999 will be wrong but common sense is usually right. No one will EVER know the answer.
To the above.... If an economy has demand & something isn't "right, fixed, working properly", etc - if there's enough $/demand - they will catch up. I guarantee that. If Brazil sees billions in opportunity - they will fix their problems and infrastructure. In time, this will be fixed, just might take a year or 2 or 5- who knows but it will happen. Cannot imagine any infrastructure for example would lag past a 5 year completion time to make very viable.
I'd simply tell anyone..... If you love land, love farming and owning it.... Try and buy at a reasonably good buy & be ready for a worst case scenario.... Be ready to ride out the "tough times" and there will be ups and downs. If you can do that, the long term I'm very confident you will be just fine. If you don't have a passion for land and are purely in it for making a $ - I would not do this IMO.

For the crop prices, if you are buying ground that's purely farming (mixed and rec ground are a different market even though they do inter-mingle for pricing and impact to eachother).... I personally feel prices will come down. Again, still some short term things. A bad case example is in 80's, again with prices crumbling but came back. Those that weathered the tough times did fine and many came back extremely well in long run. Prices will absolutely run cycles in my opinion. Long term thinkers will be fine if prepare and understand how to weather the storm & take those appropriate actions.
 
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Land prices

Bring it back

Ttt


Prices have changed, interest rates up slightly....your thoughts??
 
Last week on the Big Show they had someone on from ISU that said the poorer crop ground had dropped 10 to 20 percent.
 
I don't see it dropping much and not for long. Land is a great investimate, because they aren't making anymore of it........
 
I think the rec ground hayday is Iowa has peaked until there is a tag system change.

Now I can see maybe other counties coming up fast, but the ringleaders will see a correction. 3k for Iowa scrub ground is outrageous.
 
hoosierhunter said:
Now I can see maybe other counties coming up fast, but the ringleaders will see a correction. 3k for Iowa scrub ground is outrageous.
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True! My Grandparents bought a 72 acre piece of ground in Clarke county 3 1/2 years ago. 20 acres max tillage ground but was covered in cedars, probably 40 acres mature timber and the rest (12 acres roughly) in scrub and cedar hills to steep to farm. My grandparents somewhat knew the guy who had it before us and he wanted to get out of it. He told us a set price. So they thought bout it, did a little bit of negotiation for a month or 2 then the owner of the place got a realtor out there and he said the ground was worth 150,000. No way its worth that the way it sat at that time. Ended up telling the owner we would pay the set price and he took it, got for under 130,000. Granted it needed some work, my grandparents thought it was a good price.
If you are goin to buy land, try to find auctions or for sale by owner places. Heck of a lot cheaper!
 
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hoosierhunter said:
I think the rec ground hayday is Iowa has peaked until there is a tag system change.

Now I can see maybe other counties coming up fast, but the ringleaders will see a correction. 3k for Iowa scrub ground is outrageous.
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JUNIOR said:
True! My Grandparents bought a 72 acre piece of ground in Clarke county 3 1/2 years ago. 20 acres max tillage ground but was covered in cedars, probably 40 acres mature timber and the rest (12 acres roughly) in scrub and cedar hills to steep to farm. My grandparents somewhat knew the guy who had it before us and he wanted to get out of it. He told us a set price. So they thought bout it, did a little bit of negotiation for a month or 2 then the owner of the place got a realtor out there and he said the ground was worth 150,000. No way its worth that the way it sat at that time. Ended up telling the owner we would pay the set price and he took it, got for under 130,000. Granted it needed some work, my grandparents thought it was a good price.
If you are goin to buy land, try to find auctions or for sale by owner places. Heck of a lot cheaper!
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Tell your grandparents I'll buy that 72 acres for 131,000!!!

:D
 
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