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2013 Nebraska Agland Market Highlights

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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  1. 2013 Nebraska Agland Market Highlights by Bruce Johnson UNL Department of Agricultural Economics bjohnson2@unl.edu

  2. The Market in a Nutshell “A $7 Corn Land Market With $5 Corn on the Horizon”

  3. Recent History: Land Boom Conditions Nebraska at the “Epicenter” of the U.S. Land Boom

  4. 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

  5. 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.

  6. 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.

  7. 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

  8. 2013 Nebraska Values Adjusted For Inflation At New Heights!

  9. Key Land Boom Drivers #1 Record-Shattering Farm Income Levels

  10. Key Land Boom Drivers #2 Historically Low Interest Rates Farm Income Levels Capitalization Rates

  11. 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

  12. Value–to–Cash Rent Ratio Climbing into New Territory! Value-to-Cash Rent Multiple For Eastern Nebraska Center Pivot Cropland, 1981-2012P

  13. What’s On The Horizon? Prevailing Drought Cutting Production? Increasing Input Costs? $5/Bu. Corn?

  14. Cash Rent Market Trends More Moderate

  15. Question: Are Tenants Taking on Too-High of Rents? Answer: MAYBE!

  16. 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

  17. Summing Up: The Boom Years May Be Over Real Estate Meltdown Unlikely --But Some Readjustment on the Horizon

  18. Your Thoughts: Corn Price In: 2013? 2014? 2015-2020? Weather Patterns In: 2013? 2014? 2015-2020?

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