FCS of America CEO on Farmland Trends

With crop prices approaching multiyear lows, some folks believe the sprint higher in farmland values may have run its course.  Corn and soybean prices have been volatile and choppy following a tailspin to their lowest levels in five years on expectations for record yields and  hefty global supplies.  While commodity prices have an impact on farmland values, they’re not the only factor.  Many experts agree that whatever happens with interest rates in the near future will also help determine the likely path of farmland values.
We recently caught up with Doug Stark, President and CEO of Farm Credit Services of America, on the sidelines of Trade Talk in Kansas City…
Doug Stark

 
 
 
 
 
Doug Stark
 
Interest rates have been held in check for the past few years by a slumping overall economy.  With the national economy beginning to show signs of recovery, some pundits think a short-term rate hike is likely sometime next year.  Higher interest rates typically mean lower demand for farmland.  Earlier this month, the Federal Reserve Banks in Chicago and Kansas City reported that farmland values declined in those districts in the third quarter from the prior period, continuing a slowdown driven by back-to-back years of large U.S. corn and soybean crops and declining crop prices.