For anyone associated with agriculture, it’s probably no surprise that many analysts are predicting another tight year for farmers. The price for corn has been cut in half from the high prices that were available in 2012/2013 (Close to $8/bushel down to less than $4 currently). This isn’t a new revelation, farmers dealt with falling prices in 2014 as well.
However, the difference between 2014 and 2015 may be the yields. Lower prices last year were offset in many parts of Illinois by outstanding yields. So, while farmers were getting less for their corn, they had more of it. Many analysts are projecting slightly less bountiful yields this year, which if true, could very well mean less revenue. The question will be…what price can those bushels be sold for? A recent article written by Gary Schnitkey on the University of Illinois FarmDoc website (Projected 2015 Corn Revenue with Comparisons to Revenues from 2010 to 2014) examines the potential for this upcoming crop year. While the U of I is projecting lower corn yields in 2015, they are also projecting slightly higher prices, which should help limit the reduction in revenue.
If these projections hold true, it could mean a continued softening of the real estate market. While I don’t see a major correction coming anytime soon, if revenue for farmers continues to dwindle then the downward direction of farm prices (and farm rents) will continue as well.