Financial projections for the 2024 crop year are much different than just a year ago. One look at the commodity board tells you what you need to know. Typically, weakening commodity prices trickle down to the land market eventually. While commodity prices started their correction during the first half of last year, we saw little change or adjustment in land prices until recently.
For example, on the 9th of May, we had a large land auction in the Red River Valley for 927 acres. Overall bidder demand was great, with 40 registered from several states. Local farmers and investors were very active participants. Here are the results:
Cass County, ND Land Auction – 927± Acres
Location: Hunter, ND
Tract 1: $5,220/AC
Tract 2: $6,610/AC
Tract 3: $5,110/AC
Tract 4: $7,660/AC
Tract 5: $5,120/AC
Tract 6: $5,830/AC
TOTAL AVERAGE: $5,940/AC
How does this compare to a year ago or even 6 months ago? While there was still wonderful demand, recent auctions have shown us that prices have corrected somewhat. For example, in November of 2023, we sold 947 acres of land about 10 miles to the north of the property for an average of $6,200/AC. Last December, a higher quality quarter 3 miles to the east sold for $8,600/AC.
Late spring auction sales historically haven’t performed as well as land auctions in the early spring or late in the year, so some seasonal adjustments are necessary when analyzing this auction. Even so, I think it is safe to say the land market has peaked and is cooling off in most areas. Buyers still remain very active; however, they are now much more discerning and cautious than they were perhaps a year ago.
While some farms will change hands in June, the next major selling window is in late August and into early September before soybean harvest. It will be interesting to watch what happens this year! My prediction? Prices will remain flat to slightly down (5% or less) on the “good stuff” and continue to correct on poor land defined by bad drainage, soils, or access. If we have a rally in commodity prices or a major world event occurs (election year, anyone?), all bets are off!
For example, on the 9th of May, we had a large land auction in the Red River Valley for 927 acres. Overall bidder demand was great, with 40 registered from several states. Local farmers and investors were very active participants. Here are the results:
Cass County, ND Land Auction – 927± Acres
Location: Hunter, ND
Tract 1: $5,220/AC
Tract 2: $6,610/AC
Tract 3: $5,110/AC
Tract 4: $7,660/AC
Tract 5: $5,120/AC
Tract 6: $5,830/AC
TOTAL AVERAGE: $5,940/AC
How does this compare to a year ago or even 6 months ago? While there was still wonderful demand, recent auctions have shown us that prices have corrected somewhat. For example, in November of 2023, we sold 947 acres of land about 10 miles to the north of the property for an average of $6,200/AC. Last December, a higher quality quarter 3 miles to the east sold for $8,600/AC.
Late spring auction sales historically haven’t performed as well as land auctions in the early spring or late in the year, so some seasonal adjustments are necessary when analyzing this auction. Even so, I think it is safe to say the land market has peaked and is cooling off in most areas. Buyers still remain very active; however, they are now much more discerning and cautious than they were perhaps a year ago.
While some farms will change hands in June, the next major selling window is in late August and into early September before soybean harvest. It will be interesting to watch what happens this year! My prediction? Prices will remain flat to slightly down (5% or less) on the “good stuff” and continue to correct on poor land defined by bad drainage, soils, or access. If we have a rally in commodity prices or a major world event occurs (election year, anyone?), all bets are off!
Max Steffes
Director of Real Estate
Director of Real Estate
