US farmland values have shrunk again, for a 67th successive month, although at a slower rate, even as the recovery in farm commodity values revived the rural economy.
A farmland index compiled by Creighton University from a survey of lenders in major agricultural states came in with a reading of 44.8 for June, remaining below the 50 level which indicates a neutral market – as it has done every month since December 2013.
However, the reading was up 3.6 points month on month, and indeed the third highest of the last four years.
An index covering the farmland equipment market rose too, by 4.4 points to 35.7, albeit remaining below neutral, as it had done for every month since August 2013.
Crop rally ‘boost’
The easing in the farmland market downturn came even as farmers struggled with spring plantings, with soybean sowings running at their slowest in more than 20 years, and corn seedings at the slowest on record, thanks to persistent rains.
However, the woes provoked a rally in crop prices which saw Chicago corn futures last week hit a five-year high, helping send the overall rural US economy back into expansion, data from Nebraska-based Creighton showed.
The university said that “higher agriculture commodity prices and rebuilding from recent floods boosted” the university’s overall rural economy index, which was quoted last week by US Department of Agriculture chief economist Robert Johannsson last week in a speech to the International Grains Council conference in London.
One of the states with the strongest farmland market was actually one which has been particularly badly affected by the rains – South Dakota, which had in index reading of 45.1, up 3.6 points month on month.
South Dakota farmers, who have usually finished corn sowings by last week, had only 78% of their crop planted as of Sunday, by far the slowest of any major growing state.
For soybeans, South Dakota growers had completed 70% of seedings, compared with the typical 98% by then, although that remained ahead of the paces recorded for Michigan, Missouri and Ohio.
Separately in the farmland sector, shares in Gladstone Land tumbled by 5.8% to $11.61, after the group announced a public offering of 2.0m shares, to raise money “to repay existing indebtedness, which, in turn, will be used to fund future property acquisitions and for other general corporate purposes”.
The offering, for which Janney Montgomery Scott LLC, Ladenburg Thalmann and Nomura Securities International are acting as joint book-running managers, was priced at $11.73 per share, and was expected to raise $22.3m.
The group – whose land is leased to growers, largely in fruit and vegetable sectors – said it expected to “will acquire properties in other farming regions of the US” beyond the seven states, including California, Colorado and Oregon, where its 54,000-acre portfolio is represented.
“While our primary regions of focus are the Pacific West and the Southeastern regions of the United States, we believe other regions of the US, such as the Northwest and Mid-Atlantic regions, offer attractive locations for expansion.”
To a lesser extent, “we also expect to seek farmland acquisitions in certain regions of the Midwest, as well as other areas in the United States”.