Steffes Group: Why 2021 Is Predicted to Be A Great Year To Sell Farmland

Derived from our knowledge and expertise, we know 2021 is a great year
to sell farmland. As was predicted in the Steffes Group 2020 Spring Auction Catalog, prices on farmland remained rock solid throughout 2020 and we continue to see robust demand and strength in the new year. Demand, interest, and bidder registrations skyrocketed on farmland auctions starting in August 2020. This trend has continued with many more registered bidders than anticipated and was reflected during a recent auction of 732± acres in Walsh County, ND which saw 44 registered bidders.

The Three Industry Indicators We Rely On

Prices attained at auction sales have reflected this uptick in demand with some tracts of farmland collecting at or well above record prices. “Commodity prices, interest rates, and local yields are the three leading indicators we believe most closely influences farmland and other farm assets. All three have been favorable lately,” says Max Steffes, Site Leader.

Late 2020 Brought Us a Fourth Indicator

However, an unpredicted fourth factor emerged late in 2020. Many producers and agribusinesses took advantage of the Paycheck Protection Program in addition to the Coronavirus Food Assistance Program (CFAP). USDA now reports government payments will account for 35% of net cash farm income in 2020. This fourth factor, paired with an unexpected rally in commodity prices, record low interest rates, and average to above-average yields throughout the Midwest, propelled farmland auctions into a strong fall market which has continued into 2021.

“For investors, land is a safe investment and wonderful hedge against inflation. For farmers, it is safe, familiar, and part of their livelihood. So, when it becomes available, they are taking advantage of a once-in-a-lifetime opportunity to purchase” says Max. In 2020, Steffes Group has seen nearly 4,500 acres of farmland that has changed hands.

Predictors That Auction Teams See

The auction method of marketing is a cash today environment. It is the ultimate expression of the free enterprise system in which auction companies are often
the first to see the ups and downs, since the market cycles that we see today
are what is published 3-6 months from now. Auction companies have the best in-the-moment snapshot view of what the market is doing and can offer the best predictors for what is to come in the next season.

For more insight into what’s on the market today, or if you’re interested in seeing what your land is worth, contact a local representative near you at steffesgroup.com.