Look Back To Look Ahead For Value Trends

January 11, 2018 05:23 AM
 
Combine

Tall Dave from Bricelyn, Minn., asked me a question on Dec. 2 at a farm retirement auction in Fairmont, Minn.: “Where do you think these prices will be in 20 years, Pete?”

Our conversation took place 15' away from a 2014 Case IH Steiger 500 QuadTrac tractor with only 172 hours that wound up selling for $292,000.

I’ve been asked Dave’s question often over the years. The ever-rising price of new equipment has worked to pull up the value of good used equipment. But I couldn’t have guessed a $292,000 auction sale price back in 1989, when I started compiling sales data.

Data Clues. To look forward, I like to look back first. Take the used combine prices in the table below. It shows the highest combine auction sale price in the U.S. for each calendar year. Each sold without heads.

Machinery Pete January

Wow! Peak used combine auction prices have nearly tripled in 17 years. A few other key takeaways include:

• The $200,000 level for a combine sold at auction didn’t occur until 2007.

• Seven years later, the first combine sold for over $300,000 at auction.

• Annual sale prices have drifted higher. Major spikes took place from 2006 to 2007 and from 2013 to 2014.

In our data, I see a couple interesting findings. First, note how the annual high auction sale price on combines peaked in 2014, then dipped slightly lower in the following years. Of course, we know the ag economy has stalled amid lower commodity prices.

Also, note how often—in five of the past seven years—the annual high auction sale price occurred during the November-to-December period. Can anyone say, “Section 179 immediate write-off”? Obviously, that was a huge factor in the used equipment market, and it remains a powerful mindset.

Another factor that could hold high prices in check going forward is the significant increase I’ve seen in the number of farm machinery auctions across North America. A blizzard of sale activity occurred in late 2017. A stunningly high percentage of these auctions featured lots and lots of large late-model equipment.

Back to the Dec. 2 auction in Fairmont. After the QuadTrac sold for $292,000, a 2014 Case IH 7230 combine with 222 separate hours sold for $213,000.

In 20 years, do you think we’ll nearly triple those values and raise the highest auction sale price on combines to around $1 million? Place your bets. 

 

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.

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Comments

 
Spell Check

C.K
bad axe, MI
1/12/2018 06:19 AM
 

  Pete Yes used combine prices tripled in the last 17 years but the Fed also increased the credit market debt in this country from 28 trillion in 2000 to 70 trillion now. In 1980 it was 4.7 trillion with 18% interest. This credit market debt of 70 trillion will in time blow the machinery market up like did in the 80's mark my word it's coming.

 
 
Lee M Kissinger
Jackson, WI
1/12/2018 11:39 AM
 

  I guess if the value of a used combine gets to 1 million it is probably time to quit because not to many will be able to come close to one at that price! I can almost bet you are still going top be looking at cheap prices for our corn and beans! What is the point these inflated numbers are just too big the history will show that the prices we receive have alway been lower than they should be. Everyone else make the bucks and we are left with little or nothing. About time someone starts to rethink the model!

 
 

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