Fall 2022 Market Update
Greetings from all of us at Steffes! I hope your summer is going well. We are so excited about the opportunity to serve the Central United States. As we move through the summer, we have seen some areas needing moisture to areas that have received more than their fair share. As you will see in our catalog, we are optimistic about our fall selling season.
The Current Agriculture Market
Other than weather pressure, we are seeing much more significant issues in agriculture than we have ever seen before. Topping the list would be Production Expenses. Undoubtedly, high commodity prices have significantly helped with the increase of Fertilizer, Fuel, Chemicals, and Transportation costs, to mention a few. As we move forward, it will be important to be proactive with cash rent conversations. This is the month of August, and I am sure those discussions have started throughout the Midwest.
Farmland markets have continued to rise everywhere. In Iowa, we saw a sale in Plymouth County of $25,000/acre for a 96-acre tract. This is substantially higher than one year ago. We are up almost 35% in the past six months! With high prices, we seem to have more acres for sale. In fact, this summer, the acres available at auction in Iowa are up over double from one year ago. People are realizing and capitalizing on the high prices that will eventually turn the other direction.
Interest Rates and Supply Chain Issues
The rise in interest rates will slow the rapid increase in farmland, but as long as commodities are at an all-time high, land will continue to be in high demand. Interest rates have risen 2% since the first of the year, and I believe we have more increases in front of us. It will be an interesting road of commodity prices, interest rates, and global demand to derive from current land values. It has some startling similarities for those who farmed through the 80s. In short, with such strong equity positions, I don’t think we are done setting record prices on higher-quality farmland. In the past, we have seen the poor to medium quality ground slip first. It will be interesting to watch this in the Fall.
We continue to say it is an interesting time to be in agriculture but think of the records that have been set in the past 12 months alone. Low-hour farm equipment continues to be at an all-time high. With all the new equipment being made for the entire year already being sold, farmers and contractors are having a hard time keeping the average hours of their fleet low. In talking with a John Deere dealer in the past few weeks, he explained a new combine ordered today may not be here in time for the Fall harvest of 2023! Plus, they now require a large down payment as well as installments. The farmer also has the responsibility upon delivery to cover the inflation of costs from the day the combine was ordered to the day it was delivered. This has and continues to drive higher prices at auctions.
Looking At The Future
In the next 12 months, we will continue our expansion into the Eastern Rockies, Williston, ND, and our new facility in Litchfield, MN. We continue to grow the construction side of the business with quarterly construction online auctions, as well as single-seller, on-site live auctions. Construction, Agriculture, and Transportation auctions are what we do. We would love to help you with your next downsizing or upsizing event!
Thank you for showing interest in Steffes Group, Inc. We are so happy you are an important part of our future. Please feel free to contact any of our offices on any of the properties you find for sale in this catalog. We wish you the best in the upcoming harvest!
Tim Meyer | Steffes Group, Inc.