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n. Illinois | The bulls will never believe it until its too late. The economic calculus on land values has not changed. Cash return divided by cost of capital = land value. cash returns are going down and cost of capital is going up. does not equal land values going up or holding steady.
Average cash return on Corn Soybean grain farm in the prime area of the corn belt assuming 50-50 rotation is about $350/ac 10 year t-bill (4.50)plus 125 basis points margin = 5.75% cost of capital = $6100/ac not $16,000/ac So tell us land bulls what is going to change to continue to justify the $16,000/ac + land sales?
Oh and I want just one to say that its different this time.
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All you land bulls may not want open this thread; Auction results
