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Jul 25, 2014
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Machinery Pete

RSS By: Greg Peterson, AgWeb.com

Learn how to better manage your machinery investments from Greg Peterson, a.k.a. "Machinery Pete." He's been researching and analyzing machinery auction prices for more than 20 years.

No. of Farm Retirement Auctions Going Up

Jul 22, 2014

AuctionBiddingIA 6 13 

He wasn't kidding.

One of my long-time auctioneer friends, Gene Ryerson with Ryerson Auction & Realty, Ltd. (www.ryersonauctionrealtyltd.com), when he told me 3 weeks ago that he was beginning to get an increasing number of phone calls and inquiries from farmers looking at and thinking about having their farm retirement auction and selling off their machinery lines.

A quick look at Ryerson Auction's web site and I found six farm machinery retirement auctions coming next month. Ryerson Auction will have retirement auctions on August 1st, 4th, 7th, 14th, 20th and 26th. 

What's been happening of late here with commodity prices again? Oh yeah, falling.

Where is Ryerson Auction & Realty located? North-central Iowa...big-time grain country.

Six farm retirement machinery auctions in one little area of north-central Iowa next month is quite amazing given the extended LONG period of historically low No. of machinery auctions we've had for the past 7 years now. At our Machinerypete.com firm we not only have been tracking auction sale price on all types of machinery for nearly 25 years now, we've also been keeping tabs on the No. of machinery auctions taking place throughout North America. Check out the facts:

AuctionLevelTable2014

Chew on these figures for a moment. 63.8% fewer No. of farm machinery auctions the first 6 months of 2013 vs. the same period back in 2002. See how dramatically the No. of machinery auctions fell beginning in 2007. What happened in 2007? Commodity prices surged higher. Why quit when times are good? Exactly.

So why is the No. of machinery auctions so important. Because the No. of auctions, or lack thereof, has been one of my six key factors working in tandem to drive very strong used farm equipment values the past seven years. Here's my list of 6 key factors:

6Factors UsedValues

For four solid years now folks of all manner have been asking me one question: "Pete, when will the bubble burst with these very HIGH used farm equipment values?" My answer was always, when at least 2 of my 6 key factors begin to flip, that's when we'll begin to see recalibrating used equipment values. So now my key factor No. 4 "Low No. of machinery auctions" is beginning to change with all the auctions coming in August. Factor No. 1....if you are a grain farmer, definitely more profit challenged days are here. So that's two changing/flipping factors right there and of course currently a very high level of uncertainly regarding my Factor No. 6....IRS Sec. 179 business asset write off limits. Will Washington act to bump up the write off $$ limits here late in 2014? If so, how much? What if they don't?

Now of course if you are a livestock or dairy farmer, 2014 has produced much more favorable profit conditions and as such, I've been tracking rising auction sale prices on good used hay & forage equipment, skid steers and mid to smaller HP size used tractors. 

But if you are an older grain farmer, in north-central Iowa and beyond, more folks looking at and thinking about maybe time to sell. Late July into August also beginning to show a ramp up in the No. of large regional dealer inventory reduction auctions, the type of sales that can easily see 20+ later model used tractors and combines up for sale.

...what's going to happen with used equipment values? Stay tuned.

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JD 4440 Tractor Values Up 11.5% in 2014

Jul 11, 2014

 JD4440 SK  35K

Older, but worth more money.

That's the scoop on John Deere 4440 tractor values through the first half of 2014. The iconic tractor model made by Deere from 1978-1982 is up an impressive 11.5% in value so far this year over 2013 values, despite now being 32-36 years old. Compared to 10 years in 2004, 4440 values are up 15.2% in value. Check out the data yourself below in a table showing the Ave. Auction Sale Price on John Deere 4440's over the past 18 years:

Calendar Year Ave. Auction Price High Price Low Price
2014 $22,502 $35,000 $12,000
2013 $20,190 $47,500 $6,900
2012 $17,930 $42,000 $8,500
2011 $20,480 $37,000 $9,000
2010 $19,847 $34,000 $9,500
2009 $21,475 $58,000 $6,500
2008 $20,906 $36,000 $11,100
2007 $19,576 $32,000 $9,000
2006 $20,609 $37,000 $10,000
2005 $19,181 $40,400 $6,000
2004 $19,536 $41,400 $10,600
2003 $17,456 $25,300 $500
2002 $18,209 $29,000 $8,750
2001 $18,842 $30,000 $11,600
2000 $19,500 $28,250 $11,000
1999 $19,716 $34,250 $11,300
1998 $20,601 $37,000 $13,600
1997 $21,894 $36,500 $14,500
1996 $22,567 $37,000 $14,300

* Data by www.machinerypete.com

So why are auction sale prices rising on a 30+ year old used tractor model even as commodity price levels have softened here in 2014 vs. prior years? Well. couple factors at work here I think:

1. No. of farm machinery auctions at historic low levels. Compared to 10 years ago in 2004, our data shows a staggering 53.2% drop in the No. of machinery auctions...so we're coming off an extended strong period for farm profits, folks have money and now 53.2% fewer machinery auctions taking place. More money chasing fewer nice 4440's = rising values.

2. Buyers placing increasing value on acquiring older/simpler models. "Pete, I like that I don't have to hook it up to a laptop to fix it." If I had a nickel for every time I've heard that sentiment echoed over the past few years....let's just say I'd have myself a big bag full of nickels. Late model modern tractors, combines, sparyers and planters do amazing things with computers, GPS and all manor of technology. All great....but there is definitely something to be said for the simpler, the familar, what we're used to, what we have a history with. So when the really nice John Deere 4440's show up for sale at auction now, anywhere....tons of buyer interest, which can result in things like this 1981 JD 4440 (pictured below) with 4,552 hours selling for $47,500 on a January 19,2013 farm auction in northeast Iowa:

JD4440 IA  47500

3. The start of buying nice 4440's as collector items? I know, sounds totally weird, but I think its' true. I've been writing, talking and blogging a lot the past couple years about what I call "The New Collector Tractor"...rising auction sale prices on nice original or restored tractor models from the mid 1960's - mid 1970's. Well, it feels to me like this trend now may be stretching out to encompass classic well loved tractor models from the late 1970's into the early 1980's...so bingo on John Deere 4440's.

Here is a Youtube video I just posted this morning with a closer look at rising values on John Deere 4440 tractors this year, highlighting (5) very nice ones sold around the country + video I shot of a nice 1981 model 4440 with 4,160 hours selling on a June 19, 2014 farm auction in north-central Iowa:

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Recap of Recent Notable Tractor Sale Prices

Jul 07, 2014

 Recently, I covered a farm retirement auction in north-central Iowa where a nice 2008 John Deere 8430 MFWD tractor with 1476 hours sold for $170,000. How does that compare to what other 8430s have been selling for? See for yourself with data straight from the MachineryPete.com database:

$149,000: 2009 model, 2,296 hours, April 3, 2014, northeast Indian
$154,000: 2009 model, 2,000 hours, March 15, 2014, west-central Michigan
$148,000: 2006 model, 3,639 hours, February 7, 2013, northeast Indiana
$155,000: 2006 model, 2,870 hours, January 11, 2013, northwest Indiana
$140,000: 2007 model, 1,444 hours, December 3, 2013, northeast Missouri
$158,100: 2008 model, 2,927 hours, February 18, 2013, west-central Minnesota
$106,000: 2009 model, 5,500 hours, April 10, 2013, northeast Texas
$189,000: 2009 model, 675 hours, March 5, 2013, north-central Iowa
$199,500: 2009 model, 1,150 hours, November 18, 2013, south-central Kansas
$130,500: sold Jan. 1, 2013, northeast Mississippi
$135,500: 1,809 hours, February 7, 2013, northeast Indiana
$174,500: 1,302 hours, January 17, 2013, east-central Nebraska

 

Here's YouTube video I shot of the John Deere 8430 selling on the June 26, 2014 farm retirement auction in north-central Iowa: 

And just for fun, here’s a record sale on an Allis Chalmers D21 tractor! Here's the YouTube video I shot on June 28th at the collector auction in Bedford, Iowa:

 

Insights on Combine Values, Section 179 and Illinois Auction Highlights

Jul 01, 2014

 There was a nice farm auction on Thursday, June 19, in east-central Illinois. Here’s a couple sale price highlights:

·  2009 John Deere 9670 STS combine, 1236 engine hrs: $164,000

·  2009 John Deere 7830 tractor, 2010 hours: $105,000

·  1992 John Deere 4455 2WD tractor, 7631 hours: $31,500

That’s a pretty strong price of $164,000 on the 2009 John Deere 9670 STS combine. For comparison sake, on a June 4 consignment auction in southeast South Dakota a very similar machine, a 2009 model 9670 STS with 1278 engine hours in good condition sold for $150,000. Looking at the auction sale price data in our "auction results" database on www.machinerypete.com, it shows that overall values have solidified on John Deere 9670s this year. Here's the scoop:

·  Average auction price this year: $150,444

·  Average auction price in 2013: $146,730

·  Average auction price two years ago: $153,292

·  Average auction price three years ago: $178,682

Note the large average sale price drop from 2011 to 2012 ($178,682 down to $153,292). Not surprisingly we saw a surge in the number of 9670s sold in 2012, so there’s supply and demand at work in a big way.

So far in 2014, nearly half way through the year, I've seen just slightly fewer 9670s sold at auction v. 2013. Of course, there are still a ton of nice later model used combines sitting on dealer lots all over the U.S., which is a continuing issue to work down this inventory level. It could be that we'll see a surge of late model used combines hit the auction market here soon.

One angle I'm keeping tabs on is on the tax front, our old friend IRS Sec. 179. In June, the House of Representatives passed a tax/business bill that included a provision to bump back up the Sec. 179 immediate write off limit for any business asset purchase (new or used farm equipment included) to $500,000 for 2014. And that bill works to make this permanent. Wow, that would be something, wouldn't it? Of course the bill still must pass the Senate and be signed by the President, but I think definitely a general "feeling/hope/belief" out there in farm country that something will get done on this front by the end of the year.

For large dealer groups with multiple stores sitting on a high level of late model used combines (and 200 HP+ tractors and four-wheel-drive tractors) that potential development with Sec. 179 write off limits made higher and permanent would be very welcome news. So it’s possible that some dealer groups maybe deciding to hold off on their inventory reduction auctions this summer and wait for more positive sale conditions later this year. But it’s always risky to wait. And it’s always risky to count on Washington to get things done. This all means that it should be an interesting rest of the 2014. Stay tuned.

 

Hot Prices on Kansas Farm Auction Saturday

Jun 19, 2014

ChevyC60 KS  28K 

The weather was HOT and the bidding was HOTTER on a farm retirement auction Saturday (June 14, 2014) in north-central Kansas (Smith Center, KS).

How hot? How about $28,000 for the 1986 Chevy C60 grain truck pictured above. It had only 10,000 miles on it, a 366 engine, 2x5 transmission and an 18' steel box. Yes, $28,000 is a new record high auction sale price I've seen on a Chevy C60. It was "1 owner" truck. Most of the equipment on this sale was 1st or 2nd owner equipment. Auctioneer Lee Oliver of Oliver Realty and Auction (www.oliverauction.com) told me last night that owner Vernie Nelssen was extremely particular about the care of all his equipment.

It showed in the sale prices.

Here are a few more highlights from Saturday's sale:

2001 CaseIH MX220 tractor with 750 hours: $98,500 (new record price by $20,500)

CaseIHMX220 KS  98500

 

1981 IHC 986 tractor with 3100 hours: $20,000 (4th highest price I've seen)

IHC986 KS  20K

 

1984 Gleaner L3 combine with 2,013 engine hours & 24' header: $28,000

GleanerL3 KS with24head KS  28K

 

1954 Farmall Super MTA tractor, restored: $7,100

IHCSuperMTA KS  7100

 

1971 Chevy C50 grain truck, 36K miles, 350 engine, always shedded: $9,100

ChevyC50 KS  9100

 

Lakeside #128 anvil: $500

anvil Lakeside 128castiron KS  500

One more example for you of the very strong bidding on this farm sale Saturday in Smith Center, KS...auctioneer Lee Oliver told me he sold an SK 3/4" socket set for $475. Wow, hot sale indeed!

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