The potential for a big crop in 2014 is putting downward pressure on corn and soybean prices. Less revenue is available to cover all costs, including rent. Many farm tenants will try to negotiate lower cash rents for 2015. Whether you reduce your cash rent or not will depend on what adjustments you have made over the past three years. In reviewing cash rent history on the farms we manage, increases of $100 per acre or more occurred from 2011 to 2012. Corn prices in August and September 2010 were below $4.00 per bushel as negotiations for 2011 rents began. By August and September 2011, corn prices were in the $6 to $7 per bushel range, providing drastically more income potential as rent negotiations for 2012 got underway. Most rents increased
Our past two newsletters have noted a variable land market in late 2013 and steady to slightly stronger in early 2014. We continue to see steady to somewhat higher results for many of the land auctions we’ve tracked this spring and early summer. Our database includes 89 auction sale results by June 30, which is nearly an identical number to 2013 and 2011. In 2012, we had 142 results in our database by the end of June. From April 11 to June 19, we tracked 21 sales with 11 selling for $10,000 per acre or more. Eight of the lower ten sales brought $9,100 to $9,950 per acre. The higher-dollar sales gain the most attention, but it is important to note that only 40% of the sales we’ve tracked so far this year have exceeded $10,000 per acre. It is also important to note that land with lower-quality soils, more waste land, poor drainage, or more difficult farming features may still sell in the $5,000 to $6,000 per acre range.
The 2014 planting season was a welcome return to less stressful conditions after the struggles of 2013. Despite a slow start, corn planting was largely completed by the first week in May, and soybeans were finished by the third week of May. Cool conditions and mid-May frost slowed plant emergence and initial growth, but by late May warmer weather returned and the crops were on a normal pace. June was another story. Most of the northern part of our territory, which would be the northern 70 miles of Northwest Iowa, saw 200% to 300% of normal rainfall over this period. Sioux City reported record rainfall for the month already on June 22. We entered the spring concerned with low soil moisture levels, and rains early in the month soaked in fairly well. The week of June 14th pushed us over the top, as a widespread 7 to over 10 inches fell across this area. Results of the deluge have varied. Areas near the major rivers flooded, with record or near record levels along the Big Sioux and Rock Rivers. The Little Sioux and Des Moines River basins also saw extensive flooding.
The Iowa lease law requires notification from either party, which could be the landowner or farm tenant, in writing prior to September 1 if changes are to be made to your current lease for the upcoming 2015 lease year, which is March 1, 2015 to February 28, 2016.
