Farmland prices in Brazil’s Mato Grosso state fell in dollar terms between 2024 and 2025, widening the gap with Iowa after the two major agricultural regions had converged during the last commodity boom, according to a study by S&P Global and Purdue University.
The decline reflects tighter farm margins, high producer leverage and currency fluctuations. While cheaper land should help Brazil maintain its competitive advantage in global agricultural markets, the downturn could also offer investors an opportunity to benefit from the next appreciation cycle.
Farmland values in Mato Grosso and Iowa, leading soybean and corn-producing states in their respective countries, have been strongly correlated over the past two decades. But prices in the Brazilian state have been considerably more volatile.
Mato Grosso farmland values doubled between 2010 and 2014, then surged more than 100% between 2020 and 2022, reaching a peak in dollar terms and narrowing the gap with Iowa.
The latest rally coincided with record profitability for Brazilian farmers, fueled by strong international demand, low global grain inventories, Russia’s invasion of Ukraine and a weaker Brazilian real.
“Brazil was well positioned to ride that wave. Grain prices rose before production costs caught up, pushing margins to exceptionally high levels between 2021 and 2023,” Gabriel Faleiros, a partner at S&P Global and co-author of the study, told The AgriBiz.
Interest rates were also historically low, at around 5% in 2021, encouraging agricultural investment and borrowing. Farmers took on substantial debt, and farmland transactions surged, Faleiros said.
The result was a massive expansion in soybean acreage. Brazil added 7 million hectares (17.3 million acres) of soybean plantings over three crop seasons.
The market faced a downturn in 2023. Commodity prices and the dollar declined, squeezing revenues from crops planted when input costs were significantly higher. Meanwhile, interest rates climbed and remained elevated.
Lower margins and heavy debt burdens triggered a wave of recuperação judicial filings — Brazil’s court-supervised reorganization process, broadly similar to a Chapter 11 filing.
“Liquidity in the farmland market fell sharply, and many farmers gave up leased acreage,” Faleiros said. “That’s when Brazilian land prices began diverging from Iowa.”
In Iowa, farmland values remained relatively stable throughout 2024 and 2025 despite weaker commodity prices. Limited availability of new farmland and strong investment demand helped support the market.
The study attributed Iowa’s resilience to healthy farm balance sheets, noting that 84% of farmland carries no debt and farm incomes remain above long-term averages.
Brazil’s Cost Advantage
Lower farmland prices should continue to support Brazil’s competitiveness in the global soybean market, according to Joana Colussi, a professor and researcher at Purdue University in Indiana.
“Land is what gives Brazil its comparative advantage,” Colussi told The AgriBiz.
Land accounts for more than half of total soybean production costs in Iowa, according to a separate Purdue University study conducted by Colussi. In Brazil, land represents just 15% of total costs, while direct production expenses account for roughly 60%.
Land ownership patterns also play a significant role in the cost gap.
About 85% of Brazil’s total agricultural area is farmed by landowners themselves, limiting producers’ exposure to rising land lease costs. In the U.S. Midwest, where leasing is more widespread, approximately 75% of farms are rented, according to the S&P Global and Purdue study.
“Excluding land lease costs from production expenses makes an enormous difference” when comparing competitiveness, Colussi said.
Outlook for 2027
The study, published in September, identified signs of an improving outlook for Brazilian farmland values, largely driven by a recent recovery in global soybean and corn prices.
Currency movements could provide another catalyst. The dollar strengthened sharply against the real following Luiz Inácio Lula da Silva’s reelection, and Brazilian farmland values have historically shown a positive correlation with the exchange rate.
“The higher the exchange rate, the higher land prices tend to be,” Faleiros said.
A persistently stronger dollar in 2027, potentially combined with higher soybean prices, could support renewed appreciation in Brazilian farmland, he said.
Elevated interest rates, however, remain a constraint. Higher borrowing costs could limit investment demand and keep liquidity subdued, slowing any recovery in land values.
This story was translated from the original Portuguese with the assistance of artificial intelligence and reviewed by The AgriBiz editorial staff.
