Drought has distorted the US far, market, with the quest for water boosting price growth in land blessed by ready rains, or possessing irrigation, far higher than that in non-watered fields.

Farmland values in key central-US agricultural areas, including Kansas, the top wheat-growing state, ended last year at a record high, with cropping land appreciating particularly fast, by 25% year on year, central bank data showed.

However, the overall rise, attributed to "strong" farm profits, concealed a marked gap in performance between farms in Nebraska, which received relatively plentiful rain last year, and Oklahoma, which suffered a record-breaking drought.

"Drought clipped farm incomes in Oklahoma and Kansas," the US Federal Reserve's Kansas City bank said.

Dry vs wet

Ranchland prices in Nebraska, which overtook Kansas to second place among US cattle states last year as animals were moved north from the dry southern Plains, soared 21.2% last year.

In Kansas, the rise was 13.7%, and in Oklahoma, 6.9%.

"Drought boosted ranchland values in areas with good-quality pasture," the central bank said.

In the arable market, the value of non-irrigated farms in Nebraska soared by 38%, four times as fast as Oklahoma prices.

Even within Oklahoma, irrigated farms fared significantly better, enjoying price rises more than twice as fast as those for unwatered land.

Price outlook

The bank attributed the overall rise in values, which for crop land rose at their fastest since at least the 1990s, to "strong demand" from farmers, who accounted for 73% of sales over the year, compared with 60% in 2005.

And lenders foresaw further price gains this year, with "ample funds" for loans, at low interest rates, and "solid" prospects for farm earnings this year.

Deere & Co, the maker of John Deere farm equipment, on Wednesday trimmed by $2.3bn its forecast for total US farm cash receipts this year, reflecting weaker prospects for soybean prices.

However, at $371.9bn, the forecast remained high by historical standards.