Lower crop prices are providing some boost to US farmland prices by lifting sentiment among livestock and dairy producers, offsetting some of the depressant effect on sentiment in the cropping sector.
The Federal Reserve's Chicago bank reported a small recovery in the pace of quarter-on-quarter land price appreciation in its region, which includes the key Corn Belt states of Illinois, Indiana and Iowa, plus Michigan and Wisconsin too.
After falling 1% over the January-to-March period, prices rose in the April-to-June quarter, albeit by a modest 2%.
The performance in the "I" states, renowned as top corn and soybean growers, was mixed.
Indiana prices fell for two successive quarters for the first time in 27 years.
However, for Wisconsin, renowned for its dairy industry, prices grew by 6%, up from 1% growth in the January-to-March period.
"Profitability in the livestock sector served to counteract some of the weakness in the crop sector" in the region's land market, the Chicago Fed said.
Lenders surveyed for the data highlighted that "the improved bottom line for dairy operations corresponded with a boost in demand for farmland in some areas.
"The surge in dairy farming profits was consistent with Wisconsin's 6% jump in quarterly farmland values."
US milk prices have failed to follow values abroad into a deep decline, as highlighted by Dean Foods earlier this week, and defending the boost to dairy producers' margins from lower feed prices.
The comments came in the third of the major quarterly Federal Reserve reports on US farmland values for the April-to-June quarter, with the Kansas City bank also having noted a trend of faster price appreciation for ranchland than cropland.
"Current trends in farmland values were expected to continue for the rest of the growing season with cropland values holding at high levels and ranchland values rising further," the Kansas City Fed added, based on comments from lenders in its area which includes Kansas, Oklahoma and Nebraska.
The Chicago Fed said that its research "indicated weakness in agricultural land values in the coming quarters," with 30% of lenders it surveyed expecting a decline, compared with 2% seeing a rise, and the balance of 68% predicting a flat market.
"Farmland values may already have plateaued," the bank said.