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n. Illinois | I am with Boone, Illinois just came out with revised projections for 2023 and the return to Corn/soybean 50-50 rotation is projected to be $307/ac vs. $616/ac for the years 2021 and 2022. Interest cost is up from 4.17 % 30 year fixed in March of 2021 to 7.64% 30 year fixed as of today. 10 year t-bill is up 1.63% in May 2021 to 3.80% May 2023.
So cut the return by 50% and increase the cost of capital you are going to get lower land values. The math is simple and its not kind.
Land values are a lagging indicator so we are still buying land as if the profits from 2020-2022 are sustainable and the cost of capital is not what it actually is.
Reality will rear its ugly head and we will find lots of farmers who wished they hadn't bought that last piece at $15,000/ac+ and had to restructured their entire land debt to get the cash flow to work over 30 years and that was assuming the profits from 2020-2022 would continue.
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Land Prices
