On July 1, I had to be near the town of Imperial in southwest Nebraska for the huge custom cutter auction at South Fork Harvesters. I knew it would feature an amazing level of one- and two-year-old large-capacity machines.
The sale would be a market-setter. Everyone knew it. All eyes—of farmers, dealers, brokers, auctioneers, ag lenders and appraisers—were on this sale. Everyone wanted to know whether prices would continue to fall, continuing a pattern seen since the second quarter of 2013, or whether we would finally begin to see some solidifying of the market.
Given the lingering oversupply on dealer lots, was it even possible prices could firm up on high-dollar, late-model used equipment?
Therein lies the true beauty and brutality of an auction. Put any asset up for sale and we’ll all find out together what it’s worth when the gavel falls.
Strong Prices Surprise. Here’s what we learned on that blistering 95-degree Nebraska day as cries of “Sold” rang out: Sale prices were much higher than I expected. Across the board, they were higher. See for yourself in the accompanying data table. Five factors worked together to push bids up.
The first factor was a rise in commodity prices. I began to see rising auction prices around the country five days before the July 1 auction, just as the price of corn, soybeans and wheat shot higher. Wholesale dealers and consignment auctions alike recorded higher final sale prices on large late-model equipment.
The second factor was good local crop conditions. I always enjoy my visits to western Nebraska, which saw ample rain this spring but avoided the monsoon rains that hit a broad section of the Midwest and heavily disrupted soybean planting.
Unique Factors Converge. The third factor was the absolute auction approach. Sullivan Auctioneers of Hamilton, Ill., held this sale, and they have worked ceaselessly over the decades to promote their auctions as absolute, meaning everything sells no matter what. This tore down any reservations buyers might have had. The auction firm also broke up the 10 model-year 2014 John Deere S670 combines (2WD and 4WD) into separate locations, improving visibility.
The fourth factor was a huge virtual audience, with more than 500 online bidders registered by sale day.
The fifth and final factor was the availability of John Deere financing. Buyers could use this to purchase most of the major equipment items at the auction. We are, at least for now, in an environment of historically low interest rates. Some people refer to this as free money, but someone has to step up and loan it.
In an ever-changing environment, it pays to keep your eyes focused on where prices will head next.
Big Farm Equipment Earns High Bids
Large late-model machinery saw strong values at auction July 1 near Imperial, Neb. All machines were model year 2014 and available with factory warranties from John Deere.
|John Deere 9560RT Tractor
|John Deere 8370R Tractors (4 sold)
||193 to 596 hours
||$267,500 to $230,000
|John Deere S670 2WD Combines (8 sold)
||537 to 939 engine hours
||$260,000 to $222,500
|John Deere S680 2WD Combines (2 sold)
||537 and 771 engine hours
||$250,000 and $245,000