Land Bubble? How About a Farm Bubble!

[West Branch]

Someone recently bought some hayfields near our place for just over $1k acre. It is tough to see how someone could make that land pay for itself when you are hauling equipment from 2 hours away. Cash rent around the area is $10-$20 an acre.

 

[j-bird]

All I know is that I enjoy plotting, but not enough to try to farm! I also know that crop prices don't seem to stop people in my area. When farms come up for sale or auction it is rare - most farms are sold privately without ever hitting the open market. At auctions they will often try to sell the farm in its seperate parcels as well as one collective property - normally the lump sum is how it is sold and it typically goes to a large farmer in the area. In my area the "average" farmer runs 1500 acres or more - we don't have many family ran farms any more. It's all about scale - go big or go home! The little guy doesn't stand much of a chance in my neighborhood.

 

[MoBuckChaser]

All I know is that I enjoy plotting, but not enough to try to farm! I also know that crop prices don't seem to stop people in my area. When farms come up for sale or auction it is rare - most farms are sold privately without ever hitting the open market. At auctions they will often try to sell the farm in its seperate parcels as well as one collective property - normally the lump sum is how it is sold and it typically goes to a large farmer in the area. In my area the "average" farmer runs 1500 acres or more - we don't have many family ran farms any more. It's all about scale - go big or go home! The little guy doesn't stand much of a chance in my neighborhood.

In many areas that is very true. But I remember when I bought $3,000 an acre land from the late 70's, for $300 an acre in the early 80's. Farmers are very good at not believing there own calculator when it comes to input costs. They over project yields and over embellish financial statements to justify continuing on there path of destruction. They can go big and they may go home!

 

[j-bird]

It happens. I hate to see anyone loose their livelyhood. The farming mentality in my area for the most part seems to be "if you are not growing you are dying" - and I don't mean just growing a crop. The lack of margin is compensated for in volume - IF there is any positive margin. The one thing I know is that land is the one thing they ain't making any more of for the most part.

I tell my wife I'm going to turn my place into a trailer park and then MOVE!!!!

 

[MoBuckChaser]

It happens. I hate to see anyone loose their livelyhood. The farming mentality in my area for the most part seems to be "if you are not growing you are dying" - and I don't mean just growing a crop. The lack of margin is compensated for in volume - IF there is any positive margin. The one thing I know is that land is the one thing they ain't making any more of for the most part.

I tell my wife I'm going to turn my place into a trailer park and then MOVE!!!!

They don't make anymore land, but land is bought and sold everyday! Some guys lose on land and some guys make money. But it is always for sale

 

[SD51555]

It's been a long bull market in corn, beans, and wheat in the minds of the farmers I know. I've stood by for a long time watching this go on at a brisk pace. $1300 land went for $2000, then it went for $3000, then $4500, then $7000, then a "guy from the cities" paid $10500, now some are still thinking they'll turn the pasture into $80,000 lots for a country subdivision. All the while, corn is $2.30 above hurricane Katrina prices when they couldn't get it down the river.

Sometimes it gets hard to watch a long bull market go by. A person can start to question their sanity. They also aren't making any more cheap gold and silver. But look what happened there. Everyone is getting caught up in the stock market again finally, and it's way long in the tooth. So, while everyone is distracted in farmland and overpriced stocks, I've been spending time putting some gold and silver in my pocket while it's out of favor.

The caption on the coin above my name is: "You don't own it, if you don't hold it."

 

[foggy]

The best time to buy land is when everyone has lost interest in it......as they did in the 90's and early 00's. I bought my deer property a few years ago in a fairly hot market. I'm fully aware the price was a bit high......but I didnt want to wait for the correction in the markets.....or KNOW that a correction was coming. If you do that.....you may never participate. I may add some land if more comes available at a "fair" price.

I've bought or sold several properties over the past few years. Some low, some high, some TBD. ;)

 

[MoBuckChaser]

The best time to buy land is when everyone has lost interest in it......as they did in the 90's and early 00's. I bought my deer property a few years ago in a fairly hot market. I'm fully aware the price was a bit high......but I didnt want to wait for the correction in the markets.....or KNOW that a correction was coming. If you do that.....you may never participate. I may add some land if more comes available at a "fair" price.

I've bought or sold several properties over the past few years. Some low, some high, some TBD. ;)

I had a banker tell me once a long time ago, when everyone is running, its time to walk! When everyone is walking..its time to run! I live those words everyday!

 

[SD51555]

"The way to make money is to buy when blood is running in the streets."
--John D. Rockefeller, the world's richest man in the late 1800s

"Every once in a while, the market does something so stupid it takes your breath away."
--Jim Cramer, TV personality and former hedge-fund manager

 

[Jordan Selsor]

There any money in alfalfa? Seems I heard of people paying $8/square bail somewhere along the way. That could add up pretty quick!

 

[SD51555]

They're starving for hay in parts of southern MN. The meadows got drowned out, a lot of the alfalfa got too mature due to rain. This would be the year to make hay if you've got it. There is all sorts of unused hay ground up where I'm at. It's starting to grow back into brush. Sad too, cause the deer liked to eat out in those hay fields for a few weeks after they were cut .

My dad is outta hay because his low spots are still sopping wet.

 

[MoBuckChaser]

There any money in alfalfa? Seems I heard of people paying $8/square bail somewhere along the way. That could add up pretty quick!

We bale mainly Grass Hay, that is what most horse customers want. You don't get as much tonnage as Alfalfa, but it will dry a day or two earlier than alfalfa. And this year that has been the difference between good horse quality and not horse quality. We get the same price for either, sometimes more for grass.

$8 a bale was not uncommon last year. But you have more inputs into putting up a bale of hay than ever before. There is money in hay, but you earn it! We have big sheds to store our bales, equipment and parts are expensive. Help, if you can find it, is expensive, It is labor intensive! But good money!

 

[Jordan Selsor]

I've put up allot of hey an straw but never alfalfa. I hear bails are heavy;)
Just brain storming of ways I could bring some income in off my place.

 

[West Branch]

We do the big round bales, 6 ft tall. There have been some big hay auctions where alfalfa has went over $300 a ton, but that is at the auction so you have to factor in trucking. Big rounds in our area have varied from $30 to $80 a bale depending on the type of hay and size of the bale the last couple years. The $30 bales are brush and reed canary from when the wet areas get dry enough to cut and bale in the late summer while the $80 bales have higher % of clover and alfalfa. Those prices are when it is picked up by the buyer.

Compared to trying to grow soybeans, corn or small grains, hay is the best money maker for farms in our area. Takes a lot of acres to make it selling hay without a second income though (in our area).

 

[bwoods11]

Some talk today of interest rates on the rise. That could shift things a bit.

 

[Tree Spud]

The last few years hear in south central Wisconsin, irrigation systems having been going up like crazy.

Talked to the farmer who leases our land about costs. He said the well alone will run about $100k.

Yields will certainly go up, but that is a pretty significant investment.

 

[MoBuckChaser]

Grain Elevators in the Twin Cities remain closed going on 3 weeks now do to high water on the river. So to help the farmers out that need to sell some grain for input costs, the elevators have widened the basis about .35 cents so you get to lose that much more per bushel if you have to sell! Hahahaha, what a great scam!

 

[MoBuckChaser]

Down, Down Down today! Ouch!

 

[MoBuckChaser]

Cash New Crop Corn Bids for our area of Mpls, St Paul, Mn as of 07/21/14. Not good!

CASH GRAIN BIDS
Zip Code:
Gavilon Grain - Saint Paul, MN
Commodity Price Basis Date
Corn 3.46 -0.18 2014-07-21
New-Crop Corn 3.24 -0.48 2014-07-21
Soybeans 12.22 1.31 2014-07-21
New-Crop Soybeans 10.29 -0.43 2014-07-21

Cargill - Savage, MN (Port Cargill)
Commodity Price Basis Date
Corn 3.44 -0.2 2014-07-21
New-Crop Corn 3.35 -0.37 2014-07-21
Soybeans 12.01 0.25 2014-07-21
New-Crop Soybeans 10.34 -0.38 2014-07-21

Cargill - Savage, MN
Commodity Price Basis Date
Corn 3.44 -0.2 2014-07-21
New-Crop Corn 3.35 -0.37 2014-07-21
Soybeans 12.01 0.25 2014-07-21
New-Crop Soybeans 10.34 -0.38 2014-07-21
Wheat (HRS) 6.68 0.45 2014-07-21
New-Crop Wheat (HRS) 6.63 0.4 2014-07-21

ADM - Saint Paul, MN
Commodity Price Basis Date
Corn 3.43 -0.21 2014-07-21
New-Crop Corn 3.23 -0.49 2014-07-21
Soybeans 12.01 0.25 2014-07-21
New-Crop Soybeans 10.27 -0.45 2014-07-21

USDA-AMS - Minneapolis, MN
Commodity Price Basis Date
New-Crop Corn 3.24 -0.48 2014-07-21
New-Crop Soybeans 10.28 -0.44 2014-07-21
Wheat (HRW) 6.48 0.2 2014-07-21
Wheat (HRW 11%) 6.33 0.05 2014-07-21
Wheat (HRW 13%) 6.48 0.2 2014-07-21
Barley (Malt) 5.6 2014-07-21
Oats 3.67 0.35 2014-07-21

 

[LuckyIL]

Yikes