Growth in US farmland prices fell to its lowest in more than three years, sapped by weaker crop prices, which are prompting farmers to cut back on machinery purchases too.
A farmland price index compiled by Nebraska-based Creighton University fell to 50.9 this month, the lowest reading since January 2010.
The figure, down from 54.0 in September, was only just above the 50.0 level which indicates no growth at all, with figures below that meaning falling prices, and comes as the market enters its key autumn sales period.
Prices are already falling in some major agricultural states, including Illinois, Kansas, Nebraska and North Dakota, which suffered a particularly steep decline in its farmland market.
However, values are still rising – albeit at relatively slow rates - in the likes of Missouri and Iowa, the top corn and soybean producing state, where 80 acres of land sold last week for $17,600 an acre, which Hardin County Savings Bank claims is a record.
Ernie Goss, the Creighton economist behind the survey, attributed the market's deceleration to "weaker agriculture commodity prices", with "poor weather" contributing to fall-offs in states such as North and South Dakota, where early snowfalls are viewed "likely to spill over into the broader economies".
Todd Douglas, chief executive of a South Dakota bank, said that the "record snowfall in the western part of the state is estimated to have caused up to 25,000 cattle deaths which will have a major impact on producers in the areas hit hardest by the storm".
The pullback in agriculture sector prosperity was also evident in an index figure for agriculture machinery which came in at 44.6, its lowest since March 2010, and indicating market shrinkage.
"[Machinery] sales are declining and inventories are growing as farmers pull back on their purchases of big ticket items," Professor Goss said.
'Much slower pace'
Professor Goss forecast continued softness in the farmland market compared with 2011 and 2012, when annual price growth reached 20-30%.
"Clearly, farmland price growth and cash rent expansions in the months ahead will not be as healthy as has been experienced in the past couple of years," he said.
Indeed, bankers questioned by the university forecast rises of 2.5% in farmland cash rents over the next 12 months, down from an expectation of 9.3% when surveyed six months ago.
"Bankers clearly expect farmland prices and rents to grow at a much slower pace over the next year," he said.