Iowa farmland owners and investors should be mindful of Wall Street's current trouble, but they should also watch corn and soybean prices more closely, a farmland broker said Tuesday.

Troy Louwagie of Mount Vernon, a land consultant with Hertz Real Estate Services, said the Iowa Farm and Land Realtors survey showed that farmland values rose by 6.6 percent since the last survey in March and by 17.6 percent since the same survey a year ago.

Land prices have risen because of record commodity prices, Louwagie said, and a continuation of those prices will determine how long the increase continues.

Louwagie said the survey released Tuesday showed a slight cooling from an annual average farmland value increase of 20 percent or more during the last five years because less land is being bought this year for suburban commercial and housing development and recreation. As a result, Iowa is returning to its traditional pattern where farmers dominated land purchases.

"You're seeing less demand for land for housing and commercial developments in the cities, and a return to the more normal profile of 80 percent of buyers being existing farmers," Louwagie said. "For a few years in the middle of the decade, farmers' share of farmland purchases had dropped to 60 percent, but it has gone back up in the last year."

Louwagie said the impact is uncertain from Wall Street's mortgage-related difficulties, which have thrown several investment banking companies into mergers or liquidity crises.

"Farmland has been a solid investment, with about a 70 percent appreciation in the last five years, so it would be logical to think that some investors might consider farmland," he said. "But that would be unusual. Traditionally, farmers have been the prime buyers of farmland, and right now farmers are in good shape financially and have the cash to make purchases."

Louwagie said the biggest threat to farmland prices would be if corn and soybean prices fell. Corn futures reached a record $7.99 per bushel during the summer on the Chicago Board of Trade and soybeans reached $13 per bushel. Both prices have retreated since, with the December contract for corn trading at $5.32 per bushel Tuesday and soybeans trading at $11.30. Both of those prices are up about $2 per bushel from their levels a year ago.

"If corn and soybean prices stay strong, farmland will stay strong," Louwagie said.

Randall Hertz, president of Hertz Management, agreed that a fall in commodity prices could generate a plunge in land prices similar to their fall in the 1980s, when land values declined by 70 percent and many farms were forced into liquidation. But he said the state's agricultural economy is in better financial shape to withstand the blow.

"Fortunately, farms today are in a much stronger balance-sheet position than they were 25 years ago," Hertz said.

The statewide average for high quality cropland in the realtors survey in September was 5,619 per acre, up from $5,223 in March. Medium quality cropland averaged $4,528 per acre, up from $4,259 in March. Low quality cropland rose in value to $3,536 per acre from $3,345 in March.

Northeast and southwest Iowa showed the greatest gain in land values since March, Northeast reporting an 8.5 percent gain and southwest an 8.7 percent gain. West-central Iowa showed an 8.2 percent gain and central Iowa, northwest Iowa and southeast Iowa all gained more than 6.5 percent. The lowest gains were in north-central Iowa, at 4.6 percent, and east-central Iowa, at 2.7 percent.

"The areas with the lowest gains were the parts of the state hit hardest by the floods and wet conditions in the spring, which caused delayed plantings, runoff and leaching," Louwagie said.

The twice-yearly real estate surveys are one of three such markers of Iowa farmland values. The Federal Reserve Bank of Chicago reported a 15 percent rise in farmland values through June. Iowa State University's annual land survey released in December showed a 22 percent increase in land values during the previous 12 months.