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Dive Into the Details That Move Used Equipment

December 14, 2013
By: Greg Peterson, Machinery Pete
 
 
GregPeterson 2013 1

When it comes to guessing people’s age, I rarely hit the mark—or anywhere close, for that matter. Maybe it’s because I’m a polite Scandinavian. "Gee, sir, I’d guess you’re 65. Am I close? 77! Wow, you look so young."

But point to a piece of used farm equipment in good condition, regardless of make and model (with the excep­tion of cotton equipment), where it’s sold or the type of auction, and I can tell you how old it is with one eye closed. All I have to do is listen to the bidding action. If I hear a lot of "yeps," see as many wrists cocked in the air and the price is climbing so fast I can’t keep up, I know the equipment is 10 years or older. Even $4 corn hasn’t stifled prices for equipment with a little age.

I’ve been watching this trend intensify for the past five to eight years. The phenomenon can be linked to two factors:

  • The high-and-going-higher price of new equipment.
  • Scarcity of good equipment  that’s 10 years or older for sale. Compared with 2000 to 2005, there’s been a 60% drop in the number of machinery auctions.


Ditching the generalities, here’s how equipment values ebb and flow with the calendar, followed by details on smaller and older combines, collector tractors, miscellaneous equipment, large tractors one- to four-years old, 20- to 25-year-old tractors and the Canadian market.

To explore more data, including detailed tables, for each of the machinery categories featured in this article, visit www.FarmJournal.com/machinery_pete

Values Down Second Quarter, Up Fourth Quarter

used value index

 

I’ve been tracking auction prices on all types of used farm equipment for more than 24 years. With each passing year, it’s been interesting to watch old trends hold true and new trends develop. There’s always the "why" behind what’s hot, what’s cold, what’s high and what’s low. Beyond the "why," there’s another significant factor that drives used equipment values: when ... as in the time of year.

Farmers are familiar with the fourth quarter mushroom in used equipment values. The Bush tax cuts in 2002, initially passed to create jobs, dangled a golden carrot for the farm audience. Section 179 of the Internal Revenue Service tax code allows for an immediate income write-off for any business asset purchase (new or used) made during that calendar year.

As a result, auction prices trend upward every November and December. (See Used Value Index at right.) Used values have spiked higher every fourth quarter since 2003.

The flip side is that I’ve seen a dip in used farm equipment values during the second quarter every year since 2005. Chew on that a second … softer auction prices in April, May and June each of the past nine years. It’s probably worth your while to time your equipment purchases a little earlier in the year.

Small Combines With Age

CaseIH2366 IA  118K

This 2002 Case IH 2366 combine with 1,869 engine hours sold for $118,000 at a central Iowa farm auction in late September.


I’m not getting into the "bigger is better" debate. All I know is that while auction prices for larger late-model used combines continue to be "soft" (since the second part of 2010), I’m still seeing strong demand for older, smaller used combines in good condition.

For example, from 1999 through October 2007, I only saw two Case IH 2366s sell for more than $100,000 at auction. Since the commodity price surge in November 2007, a dozen of these combines have broken the $100,000 point.

At a Nov. 2, 2013, farm retirement auction in east-central Iowa, a 2011 John Deere 9570 STS combine with just 188 engine hours sold for $207,000 (no heads), making it the record-high auction sale price I’ve seen on that model.

Want to go really old school? A 1987 Gleaner L3 combine with 3,356 hours and a 20' grain platform sold for $24,000 at a farm auction in north-central Ohio in September 2013.

Collector Tractors

I’ve been watching the wave for original or restored tractors from the mid-1960s through the mid-1970s build momentum the past few years. Disposable dollars in pocket, folks are on the lookout for their favorite tractor or the tractor that grandpa used to teach them how to drive.

If a collector tractor is listed on a sale bill, count on two, three or even five people showing up to bid. Before you know it, the price is going, going, gone. Some of the hottest models that have recently sold include: International Harvester 1206, 1468 and 1568; Oliver 1955 and 2255; and John Deere 6030, 4000, 3020 and 4020.

The best example to highlight this trend occurred at a farm retirement auction in Springville, Iowa, on Nov. 2, 2013. A restored 1972 John Deere 4320 with 7,000 hours sold for a record-high price of $31,250. Auctioneer Andy Hoge told me that despite all of the low-hour, late-model equipment featured at this auction, they fielded the most phone calls on the John Deere 4320.

On the same November day, I was in Decorah, Iowa, covering Mecum’s collector auction. Mid-afternoon, a restored standard 1972 John Deere 4320 with open station and 6,800 hours sold for $38,000, making two new record-high auction prices on John Deere 4320s on the same day at two different auctions.

Miscellaneous Equipment

JD8300drill IA  8K

In March, a John Deere 8300 12' drill sold for $8,000 at an auction in north-central Iowa.


It’s a bit of a surprise, but there’s an intense demand for smaller used farm equipment in nice condition.

My favorite story occurred in August 2013 at a nice auction in north-central Wisconsin. Here are the highlights:

  • Allis Chalmers 7020 two-wheel-drive tractor with 2,780 hours: $15,750, a new record price
  • International Harvester 1250 grinder/mixer: $9,000, a record price by $4,200
  • New Idea 324 two-row corn picker with 12-roll husking bed: $3,000, the third highest price in 14 years
  • Bush Hog 10' offset disk: $4,450, highest price in 17 years


At a Nov. 16, 2013, auction in southeast Minnesota, an International Harvester 470 21½' disk sold for $3,400, and a John Deere 7000 6R-30 planter hit $8,250.

One- to Four-Year-Old Big Tractors

JD9630 IA  175K

This 2009 John Deere 9630 four-wheel drive with 1,171 hours sold for $175,000 at a northwest Iowa auction.


Auction prices for one- to four-year-old four-wheel-drive tractors started to tumble this past summer. For example, in 2012, the average auction price on John Deere 9630s was $211,221. From June to November of this year, those same tractors were selling for 9.4% less, with an average auction price of $191,346.

What’s causing the softer prices? The answer: too many one- to four-year-old large tractors on dealer lots that are eventually making their way to an auction. From January 2011 through October 2012, I saw 20 John Deere 9630s sell at auction. So far, in 2013, I’ve seen 28.

Regardless of brand, the story is the same for late-model four-wheel-drive tractors. Add 10 more years to the tractor and you’ll find steady values in 2013.

20- to 25-Year-Old Tractors

It felt like my arm was going to fall off while shooting video of a super sharp 1988 John Deere 4450 front-wheel-drive tractor with 2,612 hours at a March 9, 2013, farm estate auction in Alpha, Minn. My arm was going numb because it took almost 15 minutes to sell this tractor. No, the auctioneer wasn’t pokey; the interest in this tractor fueled a bidding war.

The tractor sold for a record price of $70,750 to a buyer from Tennessee who still had to pay to truck it home. To top it off, the duals sold separately for another $1,800 and the weights for $1,400.

To further illustrate the hype around 20- to 25-year-old tractors, here’s a sampling of other record-breakers:

  • Since August 2012, there have been five new record-high auction prices on Case IH 7130s.
  • In 2013, there’s been two new record sale prices on Case IH 7140s.
  • In the past five months, there have been three new record prices on two-wheel-drive Case IH 8920s.
  • Recently, a 1990 Ford 8830 front-wheel drive with 3,388 hours sold for $37,800 in southeast Minnesota. That’s the highest price I’ve seen in 15 years.
  • A 20-year-old John Deere 4960 front-wheel drive with 3,045 hours sold for $114,000 at a January 2013 farm auction in west-central Ohio. It surpassed the previous record holder by $23,000.


Used Machinery Snapshot from Canada

MF4800 SK  35K

At a Canadian auction in April, this 1984 Massey Ferguson 4800 four-wheel-drive tractor with 4,054 hours sold for $35,000.


Auctioneer Brendan Kramer of Kramer Auctions Ltd. told me about an April 27, 2013, sale that set nine new record high prices. The highlights include:

  • 1985 New Holland 358 grinder/mixer: $15,500
  • 1994 New Holland 575 square baler: $17,500
  • 1984 John Deere 4250 tractor with 3,846 hours: $48,500
  • 1998 John Deere 9510 combine with a 912 header, 1,072 engine hours: $108,000
  • 1987 Chevy 70 single-axle grain truck with 16' box: $45,000


"You can find quality used equipment up here," Kramer said in a "YouTube" video, "but you don’t find the premium, one-owner, shedded, little-used kind of equipment."

Just a couple months ago, Kramer Auctions went to southwest Saskatchewan and sold a 1981 John Deere 4240 tractor with 4,995 hours and a John Deere 158 loader for $48,000.

It’s obvious that quality used farm equipment is attracting big bucks just north of the border.

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

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 - Mid-December 2013

 
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