Monday, December 26th 2016
Since the U.S. election on November 8th, interest rates on many financial instruments have increased. Interest rate increases since November 8th likely are not large enough to put much downward pressure on farmland prices. However, farmland prices could decline if interest rate increases continue. Yields exhibited a notable increase after the U.S. national election on November 8, 2016. On November 7th, the day before the election, the ten-year yield was 1.83%. Yields increased to 2.07% on November 9th, the day after the election. Yields have increased since November 8th, reaching 2.60% on December 15, 2016. While yields have increased, the 2.60% yield on December 15th is not a high yield. Nor is the increase between November 7th and December 15th the only period of increases in recent times. The 2016 capitalized value of $12,210 per acre is based on a $221 per acre cash rent and 1.81% ten-year yield. The $12,210 is $4,760 higher than the 2016 average land price of $7,450. The 2.51% ten-year yield on December 15 results in a $8,805 capitalized value, still above the $7,450 farmland price, but only by $1,335 per acre. A ten-year yield of 2.96% results in the same capitalized value as the farmland price.