Machinery Pete: Large Tillage Equipment Values Starting to Hold

September 18, 2017 11:00 AM
 
John Deere Tillage

Doug Felton thinks he’ll harvest a good crop in southern Minnesota, but not a record.

 

“This year has been a little more of a challenge,” he said. “We've had spotty rains and it was cold and wet up here early.”

Felton knows there’s no such thing as a perfect year in farming, but 2016 wasn’t too far off with near ideal conditions all summer.

“The best part about ’16 was whether it was light ground or heavy ground, it all was good,” he said. “If you didn't get 200 bushel [per acre] corn, there was something wrong.”

“I’d say last year was probably our best year ever,” said Larry Conrad, a farmer from Dundas, Minn.

Yields may not reach last year’s levels, but with a good crop, additional machines are needed in the field each year. For both Minnesota producers, late-model used is a route they prefer to take.

“We needed another tractor in the spring,” said Conrad. “A lot of times we were short one, so I just bought another one and upgraded that.”

“Generally I am a second buyer on machinery,” said Felton. “We're large enough to have one good complete line of machinery, but if I can to have somebody take the top off of a combine, which I did last year, or the top off of a track tractor, which I did last year, there were some opportunities and the interest rates were fair and they were good. It was an opportunity to update.”

Most equipment dealers aren’t seeing the same demand for iron they did five years ago. SEMA Equipment in southern Minnesota says the record yields last fall spilled over into 2017, ultimately driving some decisions.

“In the past we've always worked with customers that have traded every year or every two years, and if we had their trade 12 months later and they were asking for another new price it was like, ‘Wow, we still get your one from last year,” said Tyler Anderson with SEMA Equipment. “We've asked our customers for some help, because we've needed to restructure how we do certain deals. 

He says farmers have responded positively. The dealership also took a creative approach in finding what they call a healthy level of inventory by hosting an auction .

“Overall numbers came in better than projected,” he said. “It was definitely successful auction in our eyes.”

Machinery Pete says SEMA’s auction flagged some impressive prices on his end.

“Folks over the last 12 to 18 months have been cognizant of the opportunity in front of them to upgrade in the late model used,” said Greg Peterson, host of Machinery Pete TV.

Overall, he says sales of larger horsepower machines are struggling the most, but the Association of Equipment Manufacturers’ latest flash report showed those sales skyrocketing 66 percent in August.

“Used values did fall quite noticeably back in ’13, ’14, ’15 and maybe a little into the early part of ’16,” he said. “Since then, the large horsepower tractors, the values have flattened.”

Machinery Pete’s trends indicate searches for high horsepower tractors top in November, December and March.

“If you flip that, you'd say, ‘Could I maybe get better value maybe in the summer months or early fall?’” he said. “There's opportunity to get some good value there.”

He says a farmer in the market to buy can find the best deal on planters today. The sector with the most momentum is the lower horsepower equipment.

“Whatever color, if it's under 100 horse and in good shape, or if it's one-year-old if it's 25 years, all that stuff is kind of red hot right now,” said Peterson.  

As harvest nears, Machinery Pete is also watching tillage trends. Small use tillage equipment prices are strong, whereas sales of larger equipment have been challenging.

“If you're looking at buying a 60-foot field cultivator, I've been seeing  those values starting to hold,” he said.

In Minnesota, SEMA Equipment’s also seeing growing demand for fall tillage, with more interest in tools for minimal till.

“It's timeliness and acres per hour, so you're able to cover the ground really fast and efficiently,” said Anderson. “You have less cost per acre, because you're not deep tilling it, and it does a good job of sizing crop and getting ready for the spring.”

As Conrad moves to more minimal tillage, the 2100 minimal till ripper is now his go-to tool.

“It’s loosening the ground, so we get better water penetration,” said Conrad. It’s also lowered our use of the disk ripper a lot.”

Conrad says he’s on a four-year rotation with the minimal till ripper, but whether it’s in the field or in the cab of the tractor, he says technology is helping him implement better conservation practices on his farm. 

“The first year you want to take it [new technology] out of the cab, throw it on the ground and drive over it,” said Conrad. “The second year, you're getting accustomed to it – it’s pretty neat. The third year you won't farm without it.”

It’s technology laying the groundwork for a more sustainable operation, no matter where commodity prices sit today.

“I feel we're going to get a decent crop,” said Conrad. “I just don't really know what's going to be handed to us. We'd like a better commodity price, but I've been in this so long you know we always seem to figure out a way to survive.’ 

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