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.
Insights on Combine Values, Section 179 and Illinois Auction Highlights
Jul 01, 2014
There was a nice farm auction on Thursday, June 19, in east-central Illinois. Here’s a couple sale price highlights:
· 2009 John Deere 9670 STS combine, 1236 engine hrs: $164,000
· 2009 John Deere 7830 tractor, 2010 hours: $105,000
· 1992 John Deere 4455 2WD tractor, 7631 hours: $31,500
That’s a pretty strong price of $164,000 on the 2009 John Deere 9670 STS combine. For comparison sake, on a June 4 consignment auction in southeast South Dakota a very similar machine, a 2009 model 9670 STS with 1278 engine hours in good condition sold for $150,000. Looking at the auction sale price data in our "auction results" database on www.machinerypete.com, it shows that overall values have solidified on John Deere 9670s this year. Here's the scoop:
· Average auction price this year: $150,444
· Average auction price in 2013: $146,730
· Average auction price two years ago: $153,292
· Average auction price three years ago: $178,682
Note the large average sale price drop from 2011 to 2012 ($178,682 down to $153,292). Not surprisingly we saw a surge in the number of 9670s sold in 2012, so there’s supply and demand at work in a big way.
So far in 2014, nearly half way through the year, I've seen just slightly fewer 9670s sold at auction v. 2013. Of course, there are still a ton of nice later model used combines sitting on dealer lots all over the U.S., which is a continuing issue to work down this inventory level. It could be that we'll see a surge of late model used combines hit the auction market here soon.
One angle I'm keeping tabs on is on the tax front, our old friend IRS Sec. 179. In June, the House of Representatives passed a tax/business bill that included a provision to bump back up the Sec. 179 immediate write off limit for any business asset purchase (new or used farm equipment included) to $500,000 for 2014. And that bill works to make this permanent. Wow, that would be something, wouldn't it? Of course the bill still must pass the Senate and be signed by the President, but I think definitely a general "feeling/hope/belief" out there in farm country that something will get done on this front by the end of the year.
For large dealer groups with multiple stores sitting on a high level of late model used combines (and 200 HP+ tractors and four-wheel-drive tractors) that potential development with Sec. 179 write off limits made higher and permanent would be very welcome news. So it’s possible that some dealer groups maybe deciding to hold off on their inventory reduction auctions this summer and wait for more positive sale conditions later this year. But it’s always risky to wait. And it’s always risky to count on Washington to get things done. This all means that it should be an interesting rest of the 2014. Stay tuned.