Iowa Land Auction Prices, August 7-13, 2020

Posted on August 17, 2020 at 8:50 AM by Jim Rothermich

There was only one auction this week and as indicated by dollars per CSR2 point, it sold very well. On Monday, August 10, a derecho (dāˈrāˌCHō) hit the state of Iowa causing massive damage. What is a derecho? It is a widespread, long-lived, straight-line windstorm that is associated with a fast-moving group of severe thunderstorms potentially rivaling hurricanic and tornadic forces. I would best describe it as a land hurricane. The term “derecho” was coined by Gustavus Detlef Hinrichs, a University of Iowa professor who first identified and named this weather phenomenon in the 1880’s. Hinrichs founded the first state weather and crop service in the U.S.

The USDA reported on Friday that nearly 14 million acres were affected in Iowa, 8.2 million acres of corn and 5.6 million acres of soybeans. The damage is centered in three dozen counties, with corn suffering more than soybeans. Some corn fields were flattened by the 100+ mph winds and some “green snapped.” Green snap, also called brittle snap, occurs when corn is in the vegetative state between V5 to V18 and strong winds cause stalk breakage at or below the growing point of the plant. Green snapped corn will likely be a total loss. Corn still attached to the roots can be harvested, but it will be more difficult and the yield and quality will be down.

How will the aftermath of the derecho affect land prices? It’s too soon to tell. There is potential for some price softening, and I would expect cancellations of some late summer land auctions in areas with lots of crop damage. Most farmers (over 95%) have crop insurance, typically protecting between 80% and 85% of either yield or revenue. This will help cover losses.