Let’s call it a runaway bull market on used tractors in good condition sold at auction in November and December 2017. That’s not altogether surprising as used equipment values have gone up in the fourth quarter 13 of the past 15 years.
Can you say year-end tax buyers?
I was curious to see what would happen once the calendar flipped to 2018. Could the strong momentum in regard to auction prices on used equipment in good condition continue? Two months into the new year the answer is crystal clear: Yes, prices are still red hot.
Let’s focus on tractors. Check out the data table on page 38, which highlights just a few of the recent strong auction prices for tractors. Note the comments column for perspective. Cruise down the column and—wow: highest price in 50 months, second-highest price in 39 months, record price, second-highest price in 47 months, second-highest price ever and more.
Lock in on the date column and this becomes a daily breadcrumb trail from around the country on a variety of used tractors, some very late model, some much older, some high horsepower models, others smaller horsepower two-wheel-drive models.
There’s one common denominator, though. Each of the tractors is in very nice condition.
What continues to become more clear as each week passes is the current used farm equipment trend is indeed all about condition, more so than I’ve ever seen it. If it’s in great shape and well cared for, there will be bidders queuing up. If the tractor is in average condition, prices are softer.
These solid auction prices still seem to surprise some folks. I understand their thinking because commodity prices are struggling and times are challenging. Keep in mind, we’ve been in this lower commodity price environment for a full five years. I think what we’ve been seeing since November 2017 is just a normal market in action. Not as much new iron has sold in recent years. Farmers who maybe traded every two or three years have extended that to five.
There is another truth lurking in the year column in the table below. Note how many tractors are 2009 through 2012 models. Six, as a matter of fact, which means pre-Tier IV engine technology. This is the delayed demand echo I’ve been talking about. Increasingly more buyers are looking for older, simpler machines, but only the ones in the nicest condition with the lowest hours and best care.
Smart auction firms have been advertising “pre DEF tractor” to the salivating masses. That label jumps out like a flashing light.
The best example from early 2018 might have been a 2000 John Deere 8400 tractor with 2,538 hours that sold at a farm auction on Jan. 10 in northeast Indiana by Sullivan Auctioneers. Auctioneer Zach Hiner shot an auction preview video for me on his cell phone and highlighted the sweet tractor. You could almost feel the interest when I posted the video on the Machinery Pete Facebook page, Twitter feed, Instagram account and YouTube channel.
The tractor sold for $100,000, which is the highest auction price on that model in six years and the fourth-highest ever.
OK crystal ball, what will the rest of 2018 hold? Perhaps a late spring through summer respite offering slightly better buying opportunities? It could happen. That has been the pattern our auction data has shown going for 28½ years now.