As we inch closer to planting season, the land market continues to see a great deal of variability in land values. While we are regularly gathering data from land sales, the only certainty we can speak with is that we are past the peak of values witnessed in 2023 and early 2024. We continue to observe occasional surprises with sales toward the high side of value ranges, but we are increasingly seeing surprising sales at the low end of market ranges, including a significant uptick in unsuccessful land auctions.
Market Factors:
Tariffs
Without question, tariffs have dominated recent headlines. Recently, a 90 day pause in tariffs brought a reprieve to the grain markets and Wall Street. It appears as though countries will independently negotiate tariffs on U.S. goods, which could bring about small victories with some of America’s smaller trading partners. However, billions of dollars in trade with China still hangs in the balance, and this outcome has the potential to most significantly impact the U.S. agricultural economy.
Interest Rates
While there has been a great deal of commentary over the last two years regarding the Fed using interest rates to manage inflation, we have not seen a great deal of movement. At the March 2025 Fed meeting, interest rates were held steady, although pundits continue to speculate toward multiple rate cuts throughout the remainder of 2025.
Grain Markets
As always, we continue to see swings in the corn and soybean markets, which are the most relevant commodities in the eastern corn belt. Exports and domestic use will likely have the largest impact going forward, and the most recent USDA Supply & Demand Report showed favorable numbers in corn. The Stocks to Use Ratio is a telling indicator of grain prices historically, and we are now at a level that we hope will be supportive of higher prices going forward. See the chart below for comparison to previous years. The years below 10% (yellow bar) are most analogous with favorable grain prices.
Source: USDA
Our team continues to be aware of many off-market farm opportunities for buyers who might be in a 1031 or 1033 exchange situation. Please reach out for details.
Essential Reading:
The Purdue University-CME Group Ag Economy Barometer showed a decline in farmer optimism from February to March due largely to trade and farm policy concerns. Analysis can be found here.
After significant increases in recent years, this article from Hoosier Ag Today discusses current legislation to lower property taxes in Indiana for both homeowners and farm owners.
