| Reality speaks - 5/3/2024 21:51 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.
A 4055 John Deere tractor just sold for more than a quarter of a million dollars. So long as there is one checkbook which is unlimited, insanity will continue.....
It may be different this time. I also don't believe that, but I've been enough of a student of the last century plus of the ag economy to know that the people who can write a check for $16,000 land today without having to ask forgiveness from a banker (but maybe their wife?) will still have their name in the plat book long after the Rosentreters and Stamps and Eugene Smiths who get Top Producer cover articles written about them are dead and gone....
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All you land bulls may not want open this thread; Auction results
