Another influence is longer-term price expectations. Many market participants are still expecting commodity prices over the next several years to average well above current prices. Finally, production cost increases have been modest, and yields for many farmers have been better than expected. The land market is a very competitive market in which those producers with lower costs, better production skills, or better price strategies have an advantage. As long as the factors identified above remain in place, little change in cash rents or land values is expected.
Low prices cause farmers to revise downward their expectations about longer-term prices.
A change in government agricultural policy that does not provide supplemental payments or provides supplemental payments at a reduced level. A continued increase in interest rates by the Federal Reserve in an effort to slow the growth rate of the economy. A weakening of the general economy that reduces the development demand for land. The continuation of the high petroleum and natural gas prices experienced this summer, further increases in these prices, or a sharp increase in the cost of other inputs as a result of these price increases. Dry weather in Indiana resulting in a sharp increase in per bushel costs.