Farm Investment Continues Solid Growth While Adding Diversification to Traditional Portfolios
The manager of our farm investment provided this update as of 9/30/2017 (the commentary has been edited for brevity):
The partnership continued to deliver stable net returns with a small gain for the third quarter of 2017. Since inception in December 2007, the farm partnership has generated annualized net returns in excess of 10%. The Fund has 589 investors and assets of $622 million as of September 30. Property holdings consist of 306 farms with 99,087 acres (83,044 tillable), and an average market value of $5,647 per acre.
After another very good growing season in the U.S., corn prices have bottomed in the $3.50 to $4.00 range. However, soybean prices are trading higher as exports remain strong and concerns grow about a developing La Niña (67% probability) that may impact South American crops. The uncertainty around crop prices has created buying opportunities, and as crop prices rise we expect farmland appreciation to resume.
While the farmland market overall has been flat, the Chicago Fed reports land prices have increased 1% in its district, and we can confirm this as we are seeing stronger buyer interest at public auctions. Our disciplined yet opportunistic buying approach has paid off as we have been acquiring high quality farms at very attractive valuations over the past year. The fourth quarter is traditionally our busiest acquisition season, and we anticipate more buying opportunities going into year-end.
Current Crop Summary