Steffes Auctioneers has a long history in the auction business, going back 65 years when my grandfather started things. Early on, our family recognized three leading indicators that influence land and machinery prices on the auction block. We still watch them closely:
In recent years, government policy, such as direct payments tied to disasters or trade wars, has also become an important factor to monitor.
The outlook right now is not great, and most people in the region know that firsthand. Will bushels help? I certainly think so.
We often tell families the best time to sell a farm is after the crop is harvested and before the next one is planted. There is something about the confidence a farmer has when they know what is in the bin or delivered to the elevator. Even if the crop is poor, at least they have certainty about their financial outlook in the short term. Knowledgeable and prepared bidders are the best bidders. When a crop is still in the field or yields are unknown, bidders tend to hesitate at auction or stay out altogether because of that fear of the unknown.
Despite depressed commodity prices, I believe the other factors will keep this land market from correcting in a major way. There is a big crop out there. Bushels are in the bin. Some of it has been sold at a profit, and some of it is yet to be priced, but the grain is there. Interest rates have eased and are expected to decrease further. The Trump administration has made clear they will use tariff dollars to support farmers affected by the ongoing poker game with China and other crucial trade partners.
If any trade deal is brokered, it could provide a lift to commodity prices, which in turn may offer more support to the land market.
If you are anticipating a major correction in farm real estate, do not hold your breath. Based on what I am seeing on the auction block, there is simply too much demand for farm and ranch real estate to "give" a whole lot. Get in if you can make it work. If you are a seller, do not let weak commodity prices stop you from bringing your land to market if the timing is right for you and your family. Appetite for land remains incredibly strong regardless of type or quality. This is especially true for pasture and tillable land, but it also applies to recreational tracts and everything in between. There is a lot of cash on the sidelines ready to head your way if you are ready.
