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Aug 23, 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.

Not Surprised by Equipment Mfg. Layoffs

Aug 16, 2014

DealerAuctionAugust2014 pic 

Can't say I was surprised.

About John Deere's announcement Friday (August 15, 2014) regarding the layoff of 600+ manufacturing employees at various sites in the U.S. due to the slowing demand for large ag equipment. No, not surprised given the realities at play currently:

1. Sharply lower commodity prices

2. Tremendous excess of large late-model (1-4 year old) used equipment on dealer's lots all over the country, particularly 4WD tractors, combines, self-propelled sprayers and large (24-row+) planters

3. The sheer amount of new large farm equipment that has been sold over the past 8 years

www.agweb.com/article/deere/lays_off_600_workers_NAA_Alison_Rice/

Now, although I'm not surprised with these new manufacturing employment layoffs, I of course do feel for those employees. No one likes layoffs. No one. Not Deere or any manufacturer. But I think a very needed step here, again given the current realities. Point 2 in my list above is a key factor. As I've written and blogged about often here the past 15+ months, implement dealers and particularly the large dealer groups with 6, 8, 10+ stores have a real issue on their hands in terms of excess inventory on large late-model used equipment. Each of these items on their books can be listed at $200,000, $250,000, or $300,000+. That's for 1 piece of equipment. Now multiply by the 10, 20, or 30+ large tractors, combines, or planters that dealer group may have on hand. Yikes.

Deere and other equipment manufacturers know conditions for new equipment sales are directly affected by this large overhang of late model used sitting on dealer lots all over. 

Time to move 'em.

So covering the auction market as I do, I'm seeing more large implement dealer inventory reduction auctions beginning to pop up, like the image above at the top of this blog, a sale bill image from a dealer inventory reduction auction this past Tuesday (August 12th) for an 11-store John Deere dealer group in eastern Iowa. We're just sitting at the beginning of this process right now.

Lots more big dealer inventory reduction auctions are coming. My sense is many dealers and dealer groups are waiting until year end 2014, hoping (like mad) that Congress will pass legislation to bump the IRS Sec. 179 business asset write off limit back up towards 2013's record high level of $500,000 for immediate write off. The current 2014 Sec. 179 business asset write off limit is only $25,000.

$25K doesn't make much of a dent in a $400K or $500K+ new tractor, combine, forage chopper, sprayer, etc.

Again, I think Deere and other manufacturers are reading this situation the right way, working to tighten up new equipment inventories. I know many dealers are happy at the tightening. One thing that wouldn't be good...for anyone...would be too much new equipment on top of too much late model used equipment.

Seen through another lens, used farm equipment values have been on the slide since 2nd Qtr. '13 after commodity prices began to sag. Here's a graph showing my Machinery Pete "Used Values Index" quarterly report. This graph for the overall farm equipment market based on all the actual auction sale price data I've been compiling now for 25 years:

Index2ndQtr2014 Overall pic

See how used equipment values have been sliding lower since 2nd Qtr. '13? This has mostly been due to softening auction sale prices on those large late model grain equipment related items, so 4WD tractors, 200+ HP tractors, combines, large planters, etc.

But as I've pointed out often, here and in print in Farm Journal magazine and daily on our Machinery Pete Facebook page (www.facebook.com/machinerypete), not all auction sale prices are dropping. No sir. Auction prices have risen on used livestock related equipment here in 2014. Risen big time. Also on 15+ year old equipment in very good condition I've been seeing holding to RISING values...like this 1997 CaseIH 8940 tractor with 2,675 hours sold for a record-tying auction sale price of $92,000 on a July 24, 2014 farm auction in southeast South Dakota:

CaseIH8940 SD  92K

Or this 1999 JD 7810 tractor with 1,050 hours sold for a record high auction sale price of $141,000 (converts to $129,139 U.S. $$'s) on an August 2, 2014 farm auction in Ontario, Canada:

JD7810 ON  141K

What's in store for the rest of 2014 in terms of used equipment values? Well, it certainly will be an interesting 4 1/2 months ahead. One prediction....we'll see more large dealer auctions coming. Stay tuned.

 

Record Prices on IHC 1566 & 806 Tractors Today on Minnesota Auction

Aug 14, 2014

OstranderMN IHCtractors (2) 

Man did I have fun today.

So did all the other folks at the Carmen Start farm retirement auction just outside of Ostrander, MN (southeast Minnesota). We saw (2) new record high auction sale prices set...on the 1975 IHC 1566 with only 450 actual "1 owner" hours and also on the 1966 IHC 806 diesel with 2,338 hours. I posted an "auction preview video" in our Machinery Pete Youtube channel (www.youtube.com/machinerypete) earlier this week and the video, as I suspected it would, generated a TON of interest...5,000+ "views" in a couple days. Always SO much interest from far and wide whenever these really low hour, 1 owner, original condition tractors show up for sale.

One of the most fun moments for me today was when the Gehling Auction truck rolled up to the IHC 1566 and auctioneer Ron Gehling began to tell the crowd about it...it got QUIET...FAST. I've seen this happen so many times over the years. It never gets old. Here is a Youtube video I just posted of the 1975 IHC 1566 selling for...$45,000 (new record auction price):

The previous record auction price I'd seen on an IHC 1566 was $25,000, all the way back on an August 26, 2004 farm auction in southeast Iowa for a 1976 model 1566, black stripe, with 1,326 hours. So $45,000 today blew that away.

The other new record price today was $16,750 on the 1966 IHC 806 diesel with 2,338 hours (pic below). The previous high sale price was $16,000 for a restored 1965 806 Wheatland sold on an August 6, 2011 Mecum "Gone Farmin" collector auction in southeast Wisconsin.

IHC806 MN  16750

90 year old Carmen Start retired back in the late 1970's and simply put these IHC tractors in his nice and tidy shed...and there they sat, started up twice a year faithfully by meticulous Carmen, but out they came this week for the auction and folks all North America and beyond enjoyed seeing and learning about them and then finally bidding on them today at the auction. 

As I said, man did I (we) have fun today.

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"Machinery Pete" TV show on RFD-TV episodes online: www.agweb.com/machinery_pete_tv.aspx

 

 

 

What a picture: Picking Big Rocks in the 1800's

Aug 01, 2014

StoughtonWI 1

Ever think you have it rough? Imagine farming in the mid 1800's.

Pictured above is a Stoughton Wagon Works machine picking large stones from a farm field near Helenville, WI back in the 1800's. The pic was sent to me by Richard Heine on our Machinery Pete Facebook page (www.facebook.com/machinerypete) last week. Richard said that's Ed and Julius Heine in the picture. Julius is Richard's great grandfather. Richard and his children are the 5th and 6th generations on the Heine farm.

Richard initially sent me this picture:

Stoughtonpic

He asked me: "Pete, you ever see one of these sell? I'm looking for a value for insurance purposes."

My reply: Umm, what the heck is that thing?

Thus began my enlightenment phase. Richard wrote back with some interesting history on this contraption. "It's been in the hay barn forever. As a kid I hated this thing, always stacking hay around it. Now it's one of my prize posessions."

Richard said they recently fixed it up. "We replaced the bad dry rotted wood and linseed oiled it."

As for what it's worth...with no corresponding auction sale price data to go on, I'm going to say it's simply priceless.

StoughtonWi 2

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The Story Behind 3 Low Hour IHC Tractors

Jul 29, 2014

IHCtractors 3 SteffesGroup8 14 14 

(3) low hour IHC tractors coming up for sale on an August 14th auction in central Minnesota. From right to left in the pic: 1976 IHC 886 with 2,150 hours; 1979 IHC 1086 with 2,694 hours and a 1982 IHC 5288 with 4,366 hours.

"Pete, what's the story on those low hour tractors coming up for sale?"

It's a natural impluse. We see tractors like the (3) IHC models pictured above coming up for sale at auction, notice the very low hours and think to ourselves..."Hmm, wonder what the scoop is, why the very low hours?" For lot of folks (most?) the default response is scepticism, which is a healthy thing. I've always advised potential buyers to make a ton of phone calls, talk to the sellers and the auction firm, ask lots of questions, get 'em talking...you'll get gut level responses to what you're hearing.

I've always loved to find out the "stories" behind the tractors.

And as I've learned from nearly 25 years covering auctions all over North America, there are often some very interesting reasons that 10, 20, 30+ year old tractors have very low number of hours on them. The (3) IHC tractors pictured above are a good example.

Auctioneer Eric Gabrielson with the Steffes Group (www.steffesgroup.com) gave me a rundown on the unique history of these IHC beauties: "These tractors were purhcased new, except the 5288, near Evansville, MN and have not been in use since renting out the land in 2003. The family told us they were started and moved yearly. They say the hours are actual."

"The family owns 400 acres of beautiful farmland in the Evansville area. They started a large automotive repair show in Minneapolis in 1932. They would come out to the farm to get away from the city life and hobby farm. I've known about the equipment for years as they are old family friends. They didn't want anyone near the old farm places as they are seasonal homes, so we hauled the entire farm line to Litchfield (MN) for our August 14th auction." Link to sale bill: www.steffesgroup.com

So the (3) IHC tractors not in use for 11 years and the farm operation was just a hobby farm type and encompassed only 400 acres for a family looking to get away from the big city. Interesting story indeed.

Here are closer up pics of the (3) IHC tractors:

1976 IHC 886 with 2,150 hours

IHC886 Steffes MN

  

1979 IHC 1086 with 2,694 hours

IHC1086 Steffes MN

 

1982 IHC 5288 with 4,366 hours

IHC5288 Steffes MN

I will of course be reporting on what these (3) tractors sell for on the August 14, 2014 auction in Litchfield, MN, along with all the other equipment on that sale. Should be very interesting.

www.machinerypete.com

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Record Prices on South Dakota Farm Auction Yesterday

Jul 25, 2014

IHC1066 SD  19500 WestendorfWL42  7K 

The price of corn may be down, but auction sale prices on good used equipment in livestock country are red hot. Proof came yesterday (July 24, 2014) on a farm auction in southeast South Dakota.

Proof? How about the 1976 IHC 1066 tractor with 6,400 hours pictured above sold for $19,500. That is with NO loader by the way. The Westendorf WL-42 sold separate for $7,000. I'm not sure which sale price garners the bigger "WOW" there...$19,500 is the 4th highest auction sale price I've seen on any IHC 1066 over the past 18+ years.

$7,000 is a new record high auction sale price on the Westendorf WL-42 loader. The next highest price I've ever seen is $6,300 back on a June 12, 2010 farm auction in northeast Nebraska.

Here are a few more sale price highlights from yesterday's southeast South Dakota farm auction by my friends at Westra Atkins Land & Auction, LLC:

1997 CaseIH 8940 with 2,675 hours, sold: $92,000 (ties record high auction price)

CaseIH8940 SD  92K

 

1990 CaseIH 7120 2WD with 3,900 hours, sold: $52,000  (3rd highest price last 17 years)

CaseIH7120 SD  52K

 

Knight 1140 manure spreader, sold: $17,250  (owner paid $10K for it 2-3 years ago)

Knight1140 SD  17250

 

IHC 105 grinder mixer, sold: $1,700  (new record high auction price)

IHC105 SD  1700

 

IHC 720 5-18 plow, sold: $3,500  (highest price on 5 bottom 720 in 18 years)

IHC720 SD  3500

www.machinerypete.com

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