I was talking with a friend of mine today – a really smart friend – about the bumper corn crop in Kentucky this year. If you’ve paid attention, the bumper crop isn’t confined to Kentucky. Across the corn belt there have been record yields in corn and other crops. I can’t help but notice crop conditions on my long drives through the beautiful State of Kentucky to look at property I’m appraising. This has led to a pretty dramatic decline in corn prices – from around $5.50 a bushel last year to around $3.50 a bushel this year, a -36% year over year change. That’s pretty dramatic.
So…what happens when corn is plentiful? Food prices drop. And when food prices drop, there’s more money in everybody’s pocket to buy goods that cause the economy to grow. As commodity prices have risen since 2008, the price for agricultural land has risen. Anyhow, according to my friend, who has real money at stake, you might look for a potential downward correction in the price of agricultural land. In the meantime, congratulations to you. Thanks to a bountiful corn crop, you’re all getting a raise!