What’s there to expect in 2018 for the used farm equipment market? Well, that’s a good question, and here’s what my gut is telling me:
1. Soft Landing: Used farm equipment values fell like a rock in the second half of 2013 into mid-2015, then began to slowly solidify. In 2016, we saw used values level off and even, surprisingly, shoot up just a smidge late in the year. This past year, values have mostly been holding and perhaps moving a little lower.
2. Leasing Trend: What began in 2015 continues to become more popular. Leases work nicely from pencil to paper, which is a very good thing.
3. Price It Right And It Will Move: This base truth has been at play in the used farm equipment market for two years. A multitude of dealers have had strong success with reduced-price, special-buy offers via email. Farmers are honing in on deals when they see them and acting quickly.
4. Yields Affect Used Values: The period from late 2016 into early 2017 saw a widening gap in auction sale prices based on where the sale took place and how crop yields performed there. Bumper soybean yields in many areas buoyed farmers’ spirits, which I saw most definitely translate into higher sale prices paid in those areas. On the flip side, better buys on used iron were found in areas that missed the record yields.
5. Dealer Consolidation: Perhaps you noticed the flurry of dealer consolidations in the second half of this year. There are likely more to come from late 2017 into 2018. In fact, the pace of dealer consolidation appears to be picking up steam.
6. More Emphasis On Used: With sales of new farm equipment under pressure, buyer attention to the used side of the equation has been ratcheted up. It’s no surprise. This trend has strongly shown through during other down ag economies, and it will continue to hold true through 2018. Farmers still have to farm and simply cannot afford downtime.
7. Condition Still Key: More so than at any point in my 28-plus years of tracking auction sale price data, the way in which a piece of used equipment sells is determined by its condition. There’s continued strong buyer demand for very good condition used equipment, even for larger late-model items with low hours. But drift into the average-condition category and watch used values slide lower quicker. This trend is likely to be accentuated by the increased number of machinery auctions.
8. More Auctions: “Stop the equity drain” is a phrase that is becoming more familiar. When I talk with our network of over 1,000 auction firms, that phrase is referenced more often as the reason behind a farm retirement sale. It seems like a lot of folks are deciding it’s finally time to “hang ’em up.” At least into early November 2017, the increased level of auction activity wasn’t affecting used values adversely. Stay tuned.
Greg Peterson is the most trusted name in farm equipment. Since 1989, he has worked with a network of 1,000 auction companies to track used equipment prices. His website, MachineryPete.com, features equipment listings from dealers across the country.