Overall, the land market is entering a more normal pace of selling and buying and has brought a softer tone to the market faced with lower commodity and financial markets, according to insight from Farmers National Co., the nation’s leading farm and ranch real estate company.

Due to a swing in commodity prices, there has been a softening of the market in eastern states, said Roger Hayworth, area sales manager. The average prices paid per acre for high-quality land from June 2015 to June 2016 declined $100 in Michigan, $200 in Ohio, $500 in Indiana, $600 in Illinois and $100 in Mississippi. Missouri saw a slight uptick of $200 per acre, and Tennessee rose $150; prices paid per acre in Kentucky and Arkansas remained steady from last June.

While commodity prices have had a significant impact on land values, location and quality remain major influencers on land values.

“When higher-quality farmland becomes available, it remains highly sought after, and pricing remains pretty stable mostly, while we see mid- to lower-level quality land decline 3-8%, depending upon the specifics of the subject property, such as tiling, soils and any improvements made,” Hayworth said.

He added, “Looking ahead, I believe we will continue to see sluggish offerings in this market and overall values swaying a little to stable until the end of the year. If commodity prices move slightly higher during the second half of 2016, expect land prices to remain stable with higher quality, maybe even clicking forward a little.”

The drop in commodity prices has caused land values to continue to soften in Iowa, said Sam Kain, ALC, GRI, ABRM, national sales manager for Farmers National based out of West Des Moines, Iowa. However, land values remain at a comparable level to June 2015, declining by $500 per acre, on average, for high-quality land.

“The limited amount of land for sale right now has definitely limited the decline in land values,” Kain said. “Although we have seen a decline in all types of land, there is still strong demand for quality land, and there appears to be renewed interest from investors. Farmland has always been a very stable investment, which is appealing to investors seeking a secure place to put their money. The majority of ag land sold in my work area has been to settle estates and still goes to farmer buyers, though.”

While farmland prices set records in 2012-13 and enjoyed double-digit increase in the past 10 years, 2016 has seen a plateau in farmland values in Nebraska. From June 2015 to June 2016, high-quality land is selling for $1,500 less per acre, on average — “and they continue to tail off,” said JD Maxson, area sales manager for Farmers National in North Platte, Neb. “This decline in farmland values in Nebraska denotes the first decline in recent years. It’s a result of a weak commodity market, soft cash rents and continued stress on livestock producers’ bottom line profit.

“Livestock producers experienced a record-setting cattle market in 2014 and throughout 2015, only to see cattle numbers increase (heifers to feedlots and not held back for breeding)," Maxson added. "Livestock producers (cow/calf and cattle on feed) have experienced a sharp decline in bottom line profitability, which has a direct impact on pastureland/grazing acres. “With cattle numbers up, one would automatically expect additional pressure on grazing acres; however short-line profits have seemingly depressed the pastureland market. Purchasing additional grazing acres, while realizing lower profits at market time, has had a direct reflection on prices paid per acre. Buyers are more cautious and have been forced to be more selective with their long-term farmland investments.”

In the northern Plains, a diverse region comprised of high-quality, tillable farmland, grassland and recreational property, land values for high-quality land from June 2015 to June 2016 continued to decline by an average of $400 per acre in North Dakota, by $100 per acre in South Dakota and by $900 per acre in Minnesota.

Lower-quality land is finding softer values in Kansas and Oklahoma. Historically, these values are still quite high, but they're much softer than three to four years ago. Brock Thurman, AFM, Farmers National vice president and area sales manager based out of Kiowa, Kan., said his region has been busy moving quality land, and higher-quality land has been selling well.

For more information on the national land market scene, click here to read more.