The bull market for Midwestern farmland showed no signs of abating Friday, as bidders paid well over $11,000 per acre for tillable land in Mason County, Ill.
A capacity crowd of bidders and spectators jammed into the Mason City American Legion hall for the auction by Murray Wise Associates. In all, the land sold to three bidders for $4.46 million, according to Joe Bubon, executive vice president at Murray Wise Associates.
"Four tracts making up 364 acres of the most productive land sold for $4.01 million, or more than $11,016 per acre," says Bubon.
While the values were higher than some expected, they are justified by total returns on farmland, says Murray Wise. "These prices may raise a few eyebrows, but I think they are opening some eyes, too. Farmers and perceptive investors recognize the impact of today's strong global demand for corn and soybeans."
The auction attracted more than 50 registered bidders, and those who were bidding at the end understand the math. "Even at prices north of $11,000, the total returns of farmland are attractive compared to almost any alternative investment," adds Wise.
"To be sure, we continue to see growth in demand by portfolio managers for investment funds, but those who know the land best -- local farmers -- see the value better than anyone," he concludes. "Someone who is already farming in the area can often farm the land without buying new equipment, so at today's commodity prices, it can be immensely profitable."