I’ve come to expect that auction prices for used machinery will go up at the end of each year based on a trend that’s more than a decade strong. I’ll be the first to admit, though, that I was surprised at just how high auction prices reached in November and the first week of December 2013. Yep, even on combines.
Used equipment buyers have pushed values higher each of the past 12 years, dating back to the Bush tax cuts in 2002. Farmers love those November and December machinery auctions for last-minute tax write-offs via Section 179. Knowing that the $500,000 max for Section 179 was likely going to be slashed to $25,000 in 2014, farmers kicked their year-end purchases into overdrive.
Hot harvesters. The push was felt all across the used combine market. The competition for older and smaller harvesters triggered a bidding duel. For example, three 30-year-old John Deere 6620s sold for $27,000 to $30,500.
A 12-year-old Case IH 2366 with 1,869 engine hours sold for a strong price of $118,000 at a late September auction in east-central Iowa.
Most surprisingly, I saw the same upward price trend even on large late-model used combines.
A 2011 two-wheel-drive John Deere 9770 STS combine, with 522 engine hours and no heads, sold for $270,000 at a Dec. 3, 2013, auction in south-central Minnesota.
At a Dec. 5, 2013, retirement auction in southeast Minnesota, a 2012 John Deere S680 with 507 engine hours sold for $291,000, also without heads. Despite the fact that it was so cold my camera quit three times, interested buyers were willing to face the winter chill. I honestly didn’t think the combine would sell for that much.
At an Aug. 14, 2013, dealer auction in west-central Minnesota, the same model of combine with almost half the engine hours only sold for $270,000.
At a Dec. 6, 2013, farm auction in west-central Illinois, a 2008 Case IH 2588 combine with 797 engine hours sold for $165,000. That’s the highest auction price I’ve seen in more than five years on that model of combine. Remember, we’re dealing with $4 corn now, not $7—yet we still saw strong sale prices on good used combines late in 2013.
Pay special attention to the last column (auction type) on my data table on page 80. The John Deere 6620s, S680 and 9770 STS combines along with the Case IH 2366 and 2588 machines each sold at farm auctions, meaning either a farm retirement or estate auction. Based on more than 24 years of data, there’s no doubt that traditional farm auctions generally yield stronger prices versus other types of machinery auctions. Recent data shows the premiums being paid for used combines in mint condition have been inching higher and higher, going back to August 2011. Come November and December, the premiums almost doubled. Particularly effective are farm auctions that also feature live Internet bidding—an on-site auction crowd harnessed with the power of interested bidders the next state over and even worldwide.
2014 strategies. If you are looking to buy, chew on the price differences. Consider the opportunities to save on equipment sold via consignment, dealer or online auctions. It’s also interesting to note that for the past four years, auction prices have significantly dipped for large, late-model used equipment from early spring through summer.
If the Section 179 tax write-off does decrease to $25,000 this year as scheduled, let’s just say used machinery values will be interesting to track.
To get a feel for the possible used value differences based on type of auction, check out the pair of Case IH 6088 combines in the data table.
First, a 2009 model with 990 engine hours sold for $133,000 on a Nov. 19, 2013, dealer auction in south-central Wisconsin. A couple weeks later, a 2008 model with 940 engine hours sold for $152,500 on a farm auction in west-central Kansas—one year older with almost the same number of hours, yet it sold for 14.7% more.
On the heels of an impressive November and early December run of used combine sales, the second week of December wasn’t so hot.
At a Dec. 11 farm retirement auction in east-central Iowa, I watched a very nice Case IH 7120 combine with 725 engine hours sell for $173,000. A second just-as-nice Case IH 7120 with a few more engine hours sold for $167,000. Both of those prices are slightly under the average auction price of $178,60
Greg Peterson writes from Rochester, Minn. For the latest in used machinery values, follow Machinery Pete on the auction trail. Contact Greg:
Despite the bitter cold, this 2012 John Deere S680 with 507 engine hours sold for an impressive $291,000.
At an Illinois farm auction, this 2008 Case IH 2588 with 797 engine hours sold for a five-year high of $165,000.