| Reality speaks - 5/3/2024 21:51
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?
I actually do agree with your point, but I'll take the bait and bite just to play Devil's advocate on why some may be optimistic.
The 10 year could change. The Fed actually voted to stop QT this week. A first step in monetary easing. Also, many may believe that the $350 may be $500+ for the next decade average. New crop is getting pretty close to $5 again, they may have manure and equipment already, may believe in carbon $, may just be an optimist, etc. My grandfather bought land for under $350. Profits are not static and people understand this. It's why some are perpetually too bearish to invest in tech stocks and others have retired early doing so.
Edit add: Pizza Ranch didn't exist back then. Very curious if $0.35 would have covered the noon buffet.
Edited by reformedbanker 5/3/2024 23:42
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All you land bulls may not want open this thread; Auction results
