I thought Elaine wrote a good article here.

https://www.dtnpf.com/agriculture/web/ag/news/article/2023/11/15/insanity-paying-7-asset-farmland-2

If you believe the Bears.. Big crops coming in South America.. Record Soybean and Record Safrina Corn Crop.  Corn and Soybean prices could be headed substantially lower.

Some have forecast on NAT the high already has occurred on 2024 futures.. (see wheat market)

Coupled with the increase in interest rates.. Treasuries are up to 4.5%. Does Elaine have a point? 

“ "Don't pay 7% to buy an asset that will only earn you 2%." Straightforward enough, as financial advice goes, but this simple statement landed like a ton of bricks when it was offered to a conference of young and beginning farmers in Omaha earlier this year.

To a roomful of people who want to build their farming businesses by buying land, it was almost like saying, "Give up on your dreams." The advice-giver was Chad Gent, senior vice president of retail credit at Farm Credit Services of America, who actually doesn't believe it's impossible for young farmers to start building a land base, and who has much more nuanced insights about borrowing money and buying farmland in the present environment.
 
 However, when it comes to the reality of how much profit is available on high-priced farmland these days versus the costs and sacrifices required to make those profits, no one can deny it's a challenge.

Here's an example I used while checking the math: Let's say a young farmer could buy a quarter section (160 acres) of non-irrigated land somewhere in the Western Corn Belt for $8,000 per acre. If the mortgage was leveraged 100% with no down payment, and the interest rate was 7%, then the annual debt service on that mortgage would come to $89,600, and that's without considering property taxes or any other cash outflows required. Against that, a farmer might grow 190 bushels per acre of corn on that land and sell the corn for $4.60 in today's market. However, if the cost of production was $3.75 per bushel (a pretty generous assumption), then the farmer's net cash inflow would be only $25,840, or 2% of the value of the asset. Quite a mismatch.

Your mileage may vary -- you could be in a region with land at $2,000 per acre or $12,000 per acre -- but in any example you use, the costs of borrowing money to buy farmland at today's record-high land prices far outweigh the returns of growing commodity grain at today's grain prices.
…

As Chad Gent at Farm Credit Services pointed out, however, "Buyers aren't only looking for an annual cash return from their asset, they're also looking -- and speculating to some degree -- on the long-term capital gain in the value of the asset. For investors, farmland has become an almost trendy alternative investment, and buyers are still really bullish on the capital gains piece because they feel confident the exit price won't go down from where it is today. Quality farmland never depreciates."

This is true not only for out-of-state investors but also for local farmers who may bid willingly for farmland at record-high prices with full knowledge of the grim cashflow prospects. "Established farmers may be thinking of owning land over multiple generations," Gent explained.

So, should farmland prices come down? Is there a bubble that might collapse if everyone in the market suddenly realizes how untenable it is to pay these all-time high land prices? Gent says, "Long term, we typically see farmland returns tracking 10-year Treasuries, which are at 4.4% today. If they get separated, they usually come back together eventually, but they are just so far off today."

One way to see annual returns on farmland improve would be to see land prices suddenly collapse. This seems unlikely, given the supply and demand balance -- both the scarcity of land available for sale and the eagerness of buyers willing to snap up whatever is offered. Another way, of course, would be to see crop prices grow dramatically higher. You can argue all you like that the justified price for the drought-affected 2023 crop should be higher than it is today, but despite any arguments, it's just not, at least not yet. And when thinking about a long-term commitment like a farmland mortgage, buyers need to be making projections not only for this one year's crop but for the next 30 crops. Cash corn at $4.60 for the next 30 years would, frankly, be a gift.

…” 

Is land going to fall as treasuries.. the alternative outperform?