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Des Moines Register reports:

Iowa set a new record price for farmland Wednesday when a 74-acre tract near Hull in Sioux County sold for $20,000 per acre.

The buyer was a neighboring farmer, Leland Kaster, who bought the land from Clinton Shinkle of Washington state.

"Farmland is very valuable up here, with good commodity prices and a strong livestock industry," said auctioneer Pete Pollema of Hull, who called the sale that was held on the land.

Pollema said he started the auction at $15,500 "because I had traveled around the country and talked to people. I knew there was one offer already for $15,500."

The previous Iowa land record was set in early October when a 120-acre parcel near Sioux Center went for $16,750 per acre. In late September an 80-acre tract near Sully went for $16,200 an acre.

The Federal Reserve Bank of Chicago said last month that Iowa farmland rose at what it called a "stunning" 34 percent in the 12 months through October.

Economist emeritus Neil Harl of Iowa State University called the prices "amazing."

The price of corn, which is the benchmark that sets Iowa land prices, has declined by $2 per bushel since early September and closed down 3 cents to $5.82 per bushel Wednesday on the Chicago Board of Trade.

Corn doubled in price from June 2010 and early but this but has softened in recent weeks. A surge of cheaper corn and feed wheat coming out of Black Sea ports from Russia and the Ukraine, strong prospects for crops in South America and Australia and China's boasts of record grain crops as well as the European debt crisis have taken many investors out of the market.

Although many have predicted a crash in land prices similar to the decline in the 1980s, Harl said he was less sure of an impending collapse.

"Remember that in the 1970s we had very high corn prices (the equivalent of more than $20 per bushel in today's money) for about 18 months, but then they went down," Harl said. "Even so, land prices stayed high through the end of the 1970s."

Harl noted the large chunk of the corn crop that now goes for ethanol. "A lot will depend on biofuels policies. The 45-cent-per-gallon tax credit is gone and the 54-cent-per-gallon import duty is threatened," he said. What is most important, he said, is the Renewable Fuels Standard, which will mandate the use of more than 13 billion gallons of ethanol next year.

The inflation-adjusted statewide record for Iowa land prices was set in 1979 with $5,770 per acre. After a long decline, that figure was reached again only last year.

Iowa State University will release its annual land price survey on Dec. 14.

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