Machinery Pete: Combine Values Enter Holding Pattern

November 17, 2016 02:22 PM
combine soybeans

The popular idea that you should trust your gut on a decision isn’t bad advice. Yet in light of rising costs, increasing risks and challenging profit margins, trusting your gut isn’t good enough. 

Our deeply held beliefs are wonderful, powerful pieces of us. But these beliefs also can make us blind to challenges and opportunities in front of us. 

For example, let’s say you’ve always believed it’s better to own versus rent. Consider home-ownership trends following the Great Recession. Many folks ditched home-ownership, choosing to rent and benefit from the increased flexibility it affords. Of course, a big part of that had to do with falling home values.

It’s always better to own versus rent, right? That’s true—until it isn’t.

Perception Versus Reality

We can draw a similar analogy in the world of farm equipment. How many of you were leasing equipment five years ago? How about now? Things change fast. Don’t let the current storyline be the sole driver of your business decisions.

Let’s look at the used combine market. The story in the coffee shop and all around us is that things are tough. Used combine values must be falling. Yet our data say otherwise. Used combine values have been holding for the past 12 to 15 months. Check out the chart. See how used combine values have basically flat-lined? 

This is what I love most about the auction dataset. It doesn’t lie. It's agnostic. It's Switzerland. Folks at auctions and people all over the internet can and do chatter about what an item could or should sell for. But at the end of the day, only one data point matters:  
the sale price. 

Examples of steady used combine values include this year’s average auction price of $110,997 for  John Deere 9770 STS models. That’s down a mere 0.8% versus the 2015 average auction price. A pair of 2016 model Case IH 9240 combines with two engine hours apiece sold Aug. 18 for $327,500 each at a consignment auction in central Ohio. Those are strong hard-cash prices for new machines at a summer wholesale auction.

Truths About Combines

The volume of people searching for used combines at rose 49% in the third quarter this year compared to the previous quarter. Online traffic linked to combines increased 39% in October compared to September. 

Facts are facts. Used combine values are holding, and there’s still a good supply available. Perhaps now is a good time to look at upgrading or getting into a second machine. Talk with your local dealer. Watch the auction front. Keep those eyes open.

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