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Machinery Pete: November Sales Keep Pace

December 7, 2013
By: Greg Peterson, Machinery Pete
JD4320 IA  31250
This nicely restored 1972 John Deere 4320 held the top spot at $31,250 for a mere hour, then another John Deere 4320 sold for $38,000 at a collector auction in Iowa.  
 
 

After a six-month slump in auction prices for large late-model used farm machinery, I could hardly wait for an early November retirement auction in Springville, Iowa. The sale by Hoge Auctioneering featured a beautiful line of late-model farm equipment, all of which was in exceedingly good condition.

I was particularly interested in this auction for one reason: timing. While auction prices for large late-model tractors and combines had been a bit sluggish, prices for all types of equipment with a bit of age but in good condition were holding steady, even inching up a bit.

When November rolled around, along came several competing forces in the used farm equipment market:

  • Auction prices have gone up in the fourth quarter for the past 11 years.
  • There is an uncertain future for Section 179 of the tax code, which allows for immediate write-off of a business asset (new or used) purchase. For 2013, the limit is $500,000, but that number is set to drop to $25,000 for 2014.
  • The reality of $4 corn sank in.
  • More auctions than usual are slated for the last two months of 2013.
JM750 IA  22500

Among the lineup of late-model equipment at the Springville, Iowa, retirement auction was a J&M grain cart that sold for $22,500, the fourth-highest price ever.



While the first two points seem to point to strong-to-increasing auction sale prices in late 2013, the last two points could deal a blow to used farm equipment values. What effect would these forces have on the east-central Iowa auction? When the sale came to an end, five new record-high auction sale prices had been set, in addition to several other near record-breaking prices.

The 2011 John Deere 9570 STS combine with 188 engine hours sold for $207,000, the highest auction sale price I’ve seen to date. It beat out a 2011 model with 209 engine hours that sold for $203,000 at a Dec. 28, 2012, farm auction in west-central Illinois. Note the timing of that sale—once again, the powerful year-end tax mindset was at play.

Also claiming the top spot was the 2010 John Deere 8245R front-wheel assist tractor with 564 hours that sold for $168,500.

Ah, the power of the tax write-off. Since the first Bush tax cuts of 2002, farmers have made last-minute tax deductions to offset strong income. Faced with the possible decimation of the lofty Section 179 write-off, farmers voted with their checkbooks on this and other November 2013 auctions.

Also of interest at the Springville, Iowa, auction was a nifty restored 1972 John Deere 4320 tractor with 7,000 hours. Auctioneer Andy Hoge told me they got more phone calls leading up to the sale on the 41-year-old tractor than any other piece of equipment listed on the sale bill. It sold for $31,250, a new record-high auction sale price on a 4320.

Interestingly enough, that record price only lasted an hour. At a Davenport, Iowa, collector auction by Mecum Auctions, a restored 1972 John Deere 4320 tractor with 6,800 hours sold for $38,000. This same auction also had a 1974 International 1568 with 2,600 hours sell for $41,500 (a new record), a 1972 John Deere 4000 diesel with 5,400 hours sell for $36,000 (second-highest price ever) and a pair of International 1206 tractors sell for $24,500 and $29,000.

While $4 corn stinks for the grain farmer, it doesn’t appear to be impacting used equipment values yet.

For the latest in used machinery values, follow Machinery Pete on the auction trail. Contact Machinery Pete:

E-mail: machinerypete@farmjournal.com

Website: agweb.com/machinerypete

Facebook: www.facebook.com/machinerypete

Twitter: @MachineryPete

YouTube: youtube.com/machinerypete

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FEATURED IN: Farm Journal - December 2013
RELATED TOPICS: Machinery, Machinery Pete

 
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