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Values to Settle

February 26, 2014
By: Greg Peterson, Machinery Pete
JD8360R KS  241K
  

Used 200+ hp tractor values decline

Are you or have you been the parent of a teenager? If so, you’ve likely had your share of "yeah buts." My daughters knew I wasn’t a fan of going down the "yeah but" explanation road; however, I always tried to listen. This is my attempt to prepare you for Machinery Pete’s "yeah but," so hear me out.

Values on used 200+ hp tractors moved lower, as the fourth quarter of my "Used Value Index" shows. Rated at 8.3 on a scale of 1-10, 200+ hp tractor values are tied for the lowest quarterly rating since the middle of 2007. Values also reached 8.3 in second quarter 2010. The Index ratings are based on 24-plus years of data compiled from auction sales.


"At a farm auction in south-central Kansas Nov. 18, I saw a 2012 John Deere 8360R tractor with 650 hours sell for $241,000—a record auction price."


A buildup of one- to five-year-old used 200+ hp units on implement dealer lots has driven the price decline, which has meant less price pressure at auction because there are more options sitting on dealer lots. The average auction price for John Deere 8330s fell 10.5% last year, from $142,267 in 2012 to $127,308 last year and dropping even more in the fourth quarter of 2013 when four 8330s sold, averaging $117,375.

While used 200+ hp tractor values are down, I need to interject a few "yeah buts" for a full understanding.

Yeah But No. 1:

Values were up sharply from Nov. 1, 2013, through about Dec. 11. The annual fourth quarter year-end tax-buyer bump kicked in hard, even on used late-model one- to five-year-old 200+ hp tractors, which had been getting softer since late spring.

At a farm auction in south-central Kansas Nov. 18, I saw a 2012 John Deere 8360R tractor with 650 hours sell for $241,000—a record auction price. Then, during the last three weeks of December, prices on late-model 200+ hp tractors softened.

Yeah But No. 2:

Values are not falling on used 200+ hp tractors that are 10-plus years old and in good condition. Strong premiums continue to be paid at auction.

For example, at a Jan. 25, 2014, farm auction in west-central Indiana, a 1991 model Case IH 7140 (200 hp) tractor with 2,185 hours sold for $70,500. That’s the second highest auction price I’ve ever seen on a Case IH 7140. Auctioneer Jeff Boston of Boston Auction Service said leading up to the sale on the Case IH 7140, he had calls from interested buyers located anywhere from Louisiana to Iowa and Ohio.

What’s behind the strong buyer interest for nice condition older used 200+ hp tractors? Scarcity.

It’s very difficult to find tractors such as this with few hours and only one or two owners. So when they do show up for sale, tons of folks want in on the action.

The second factor at play is simply the high cost of new models, as well as one- to five-year-old used models. Those big prices tend to make $70,000 to $100,000 look much more attractive.

 

Since 1989, Greg Peterson has compiled more than 500,000 auction prices, which he updates at www.machinerypete.com. Read his blog and watch auction videos at www.AgWeb.com/machinerypete. E-mail him at machinerypete@farmjournal.com.

 

HP tractor values slip

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FEATURED IN: Top Producer - March 2014

 
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