Should I call you Pete or Greg? I get that question all of the time. No worries; I’ve been answering to both on the auction trail for 24 years. I’m thrilled to join the Farm Journal Media team and expand the conversation about current trends in the used farm equipment market. You’ll find me in Farm Journal, Top Producer, at AgWeb.com, each week on "AgriTalk" and every Monday on "Ag Day."
For more than two decades, I’ve been compiling auction sale price data all across North America on all types of equipment. I currently have more than 500,000 actual auction sale prices on record. My hope has always been that our data can empower you to make the very best buy, sell, trade and appraisal decisions possible. Don’t rely on your gut; rely on the facts.
Hot wheels. What’s the biggest story so far this year? That’s easy: the continuing rise of used tractor values. The best way I know to highlight this trend is with specific examples. Let’s start with the 200-hp John Deere 4960 model made from 1992 to 1994. Until early fall 2011, the highest auction price I’d ever seen on a John Deere 4960 was $76,500, which was the case for a 1994 model with 1,854 hours at a Jan. 10, 1998, farm auction in northeast Iowa.
Since September 2011, I’ve seen 10 John Deere 4960s sell for $80,000 or more. (See table on page 72.) In January, a John Deere 4960 sold for $114,000 at a farm auction in west-central Ohio, and in February, a 1994 model sold via an online auction in northeast Illinois for $110,000.
The John Deere 4960 that sold at the Ohio auction was purchased by a farmer for his 80-plus-year-old father. Dad’s favorite tractor is the simple-to-run John Deere 4960. Buying a like new model was the perfect way to keep dad happily farming.
The John Deere 4960 that sold at the Illinois auction two weeks later really surprised me, especially because it was an online auction. A couple months after the auction, a dealer from Pennsylvania sent me an e-mail that said: "Pete, I was runner-up bidder on that 4960 for a customer of mine, an older farmer. I think I should have kept bidding."
That’s the thing with these high auction sale prices—they don’t occur in a vacuum. It’s easy for folks to say, "Wow, that’s a crazy price for a 20-year-old tractor." But, there were one, two and even three other bidders in the mix to buy the tractor. Many leave the auction thinking maybe
I should have bid one or two more times, like the dealer in Pennsylvania.
The ever-increasing price tag of a new tractor is a major driving force behind the rising values on good used tractors (and all types of used equipment, for that matter). Come with me to any auction with a well-kept used tractor and you can bet the auctioneer will say at some point: "Boys, what does a new one cost?" Inevitably, the bidding picks up and the price tag too.
A couple other factors that have contributed to an increase in used tractor values are strong farm income and lack of availability. We have 55% to 60% fewer machinery auctions than we did in 2000 to 2006. If the John Deere 4960 with 3,045 hours in west-central Ohio had been sold through a dealer, it would not have sat on the lot more than a day. Most dealers would have two to four prospective buyers waiting in line to buy it.
Color doesn’t matter when it comes to the upswing in used tractor values. This year alone, I’ve witnessed the Case IH 7140 beat its record auction sale price twice. On Feb. 15, a 1992 model with 2,740 hours sold for $69,500 at a farm auction in central Iowa. At a July 27 farm auction in central Iowa, a 1990 Case IH 7140 with 3,270 hours sold for $76,500.
That’s right, a month ago when the commodity price outlook was turning bearish and talk of $4 corn was climaxing, a 23-year-old tractor sold for more than $75,000. At the same July auction, a 1992 Case IH 7120 two-wheel drive model with 3,130 hours set a new sale record at $63,000.
Would you believe that I have recorded five new record auction prices for Case IH 7130s since late August 2012? Here is the progression: $62,000 at an Aug. 12, 2012, southwest Minnesota sale; $66,000 at a Nov. 24 southeast Iowa sale; $67,000 at a southeast Iowa sale on Dec. 6; $68,000 at a Dec. 7 southeast Nebraska sale; and $70,500 at a Jan. 21, 2013, sale in north-central Iowa (a 1989 model with 3,391 hours).
Show me a 20-year-old tractor in great condition with low hours, any color, any size, and I’ll show you red-hot bidding anywhere in the U.S.
Since 1989, Greg Peterson has compiled more than 500,000 auction prices, which he updates daily at www.machinerypete.com. To read his blog and watch auction videos, visit www.agweb.com/machinerypete. Contact him at email@example.com.