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2013 Nebraska Agland Market Highlights. by Bruce Johnson UNL Department of Agricultural Economics bjohnson2@unl.edu. The Market in a Nutshell “A $ 7 Corn Land Market With $ 5 Corn on the Horizon”. Recent History:. Land Boom Conditions. Nebraska at the “Epicenter”

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2013 Nebraska Agland Market Highlights

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2013 Nebraska Agland

Market Highlights

by

Bruce Johnson

UNL Department of

Agricultural Economics

bjohnson2@unl.edu


The Market in a Nutshell

“A $7 Corn Land Market

With $5 Corn on the Horizon”


Recent History:

Land Boom Conditions

Nebraska at the “Epicenter”

of the U.S. Land Boom


Agricultural Land Markets up Across

the Country, but Nebraska And Neighboring

States Leading the Nation

0 5 10 15 20 25 30 35 40

Rank / State

USDA Farmland Value Percentage Changes

6/1/2011 – 6/1/2012

Source: Economic Research Service, U.S. Department of Agriculture


The Current Market

Nebraska Land Values Climb 25% in Past 12 Months

2013 Values and Recent Trends by Land Class in Nebraskaa

a Source: Annual February 1st UNL Nebraska Farm Real Estate Market Surveys.

b Value of pivot not included in per acre value.


Sharp Upward Advances Across the State

2013 Nebraska Farmland Values and Recent Trends

by Sub-State Region

Source: Annual UNL Nebraska Farm Real Estate Market Surveys.


Nebraska Nominal

Agricultural Land Values

Longer-Run

History:

  • Upward but not steady climb for several decades

  • “Boom to Bust” event just 30 years ago

  • Major climb in nominal values in recent years

2013P


2013 Nebraska Values Adjusted For Inflation At New Heights!


Key Land Boom Drivers

#1 Record-Shattering Farm Income Levels


Key Land Boom Drivers

#2

Historically Low Interest Rates

Farm Income Levels

Capitalization Rates


Estimated Net Rate of Return on Investment: Selected Years

Percent

0 1 2 3 4 5 6

2012:

Irrigated Land

Dryland Cropland

Grazing Land

2007:

Irrigated Land

Dryland Cropland

Grazing Land

2002:

Irrigated Land

Dryland Cropland

Grazing Land

Source: UNL Nebraska Farm Real Estate Market Developments Survey Series


Value–to–Cash Rent Ratio

Climbing into New Territory!

Value-to-Cash Rent Multiple For Eastern Nebraska Center Pivot Cropland, 1981-2012P


What’s On The Horizon?

Prevailing Drought

Cutting Production?

Increasing Input Costs?

$5/Bu. Corn?


Cash Rent Market Trends More Moderate


Question:

Are Tenants Taking on

Too-High of Rents?

Answer:

MAYBE!


Depends on 2013 Commodity

Prices and Yields

If Paid $350/AC for Irrigated and $220/AC Dryland Cropland

If Paid $350/AC For Irrigated

and $220/AC Dryland Cropland


Summing Up:

The Boom Years May Be Over

Real Estate Meltdown Unlikely

--But Some Readjustment

on the Horizon


Your Thoughts:

Corn Price In:

2013?

2014?

2015-2020?

Weather Patterns In:

2013?

2014?

2015-2020?


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