Farm Machinery Values Find Footing

March 21, 2016 03:00 PM
Farm Machinery Values Find Footing

For central Illinois farmer Jason Lakey, planting date can be more important than seed selection for soybeans.

“In the last several years, we've noticed a huge correlation with yield and planting date,” explains Lakey. “And that sweet spot, in this area, is April 20 to May 10. And it’s hard to be in that range if you're trying to get your corn crop planted at the same time.”

That’s why he purchased a new tractor and planter in 2014. It’s dedicated to planting beans. Lakey isn't alone. When the planting light turns green, farmers in this area don't want to waste any time.

“That's what saved us last year,” says Homer, Ill., farmer Steve Messman. “The crop was in, and at least it was tall enough that a lot of it didn't drown out. It may have turned yellow, but it came back out of it.”

Messman  says since the price is right, he's looking to upgrade to a 24-row planter this year. That trend is causing local dealers to take notice.

“We are seeing more interest in used equipment than maybe we have in the past from some of our customers who may have traditionally purchased more new equipment,” says Mike Miller, regional sales manager for AHW in Illinois' Champaign County.

Miller says there's more of the two- to five-year-old machines on lots today, and fewer pieces of five-to ten-year-old equipment.

“I think that drives where the values are right now, there are some really good values in that two- to three-to four-year-old machinery,” says Miller.

“Dealers around the country are being very aggressive and moving a lot of inventory off their books, and I mean a lot,” explains Greg "Machinery Pete" Peterson, host of Machinery Pete TV. “I’ve talked to three dealers in the last couple weeks that each have moved $30 million off their books, and that was all last year, and it was tough for them to do.”

Machinery Pete says he's seeing a similar situation in auctions to start off 2016. “I started seeing it in early 2015,” he recalls. “We had a drop in used values, particularly on the late model, one- to five-year-old, and there comes a point when it drops enough--farmers are very savvy and they pay attention,--and they see opportunity.”

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Upgrading to late-model, used equipment frequently gives farmers newer technology. “Sometimes we're on such a thin margin that just a small amount of additional bushels that can make the difference between a profit and a loss,” says Miller.

AHW says they've seen interest on the technology side skyrocket over the past few years, with the data from farm machinery quickly being put to use "on the (farmer's) behalf, whether it's the customer himself or a trusted advisor,” says Justin Blanchett, vice president of AHW Integrated Solutions.

Blanchett says customers are becoming more at ease with how their data is being used. “It's truly the customer’s data, and (technology) adoption is (growing) due to the fact that folks (are) recognizing that (and) realizing that they're able to share that information with someone much more quickly to enable their own decisions to be made,” he says.

AHW is backing the technology momentum by creating its own Solutions Center. Blanchett says he understands with the current commodity prices, there's no room for error. So, the center is a farmer's first line of defense in troubleshooting farm machinery tech problems.

“We have the ability to remote into their screens,” says Blanchett. “So while the customer is in the cab, we're able to log in view exactly what they see on their screen. “We have a lot of folks to proactively call in in their first few fields. We make sure their i's are dotted and t's are crossed, so that we have good data right off the bat.”

While interest in data isn’t going anywhere anytime soon, Machinery Pete says these good values on equipment are temporary.

“Have we put a bottom in on prices, or is it too early to say that yet?” asks U.S. Farm Report Host Tyne Morgan.

“Well, that's what people are asking me right now,” answers Machinery Pete. “Should I buy right now or should I wait? And my answer there is that waiting is never a good strategy. Trying to time any market is very difficult.”

Miller agrees the machinery market can be tough to predict. “The values are always driven by supply and demand, and we've had maybe more supply than what we would have liked,” he says. “We are starting to see that maybe we're at a better balance than we have been, and the values in used machinery right now, may not be around like this forever.”

For Lakey, he’s taking advantage of the current situation. A late-model track tractor has caught the attention of the Illinois farm, who hopes the machinery might propel his operation toward profits in 2016. 

What are you seeing with used machinery values in your area? Let us know in the comments. 

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