Machinery Pete: Three Timely Equipment-Buying Tips For Fall

September 3, 2015 11:07 PM
 

Values on used farm equipment continued to fall during the second quarter of 2015. For a brief interval, used equipment values inched up in tandem with commodity prices, which shot higher during the last week of June into early July. Yet used values continued to erode into early August.

You’ll see this reflected in the accompanying graph detailing sliding used farm equipment values trends over time, compiled using my Machinery Pete Used Values Index for the second quarter of the year.

Sliding Values Explained. The 6.7 index rating for the overall used equipment market is down from a 6.9 rating in the first quarter of 2015. It equals the lowest overall equipment rating since the third quarter of 2005. Used farm equipment values have fallen since the second quarter of 2013.

Falling auction prices on large late-model used equipment has driven the index rating lower. During the second quarter of this year, the used equipment categories with the softest auction price levels were 200-plus-horsepower tractors, planters and sprayers.

Values on late-model used 24-row and 36-row planters were hit particularly hard in early August. At a farm estate auction in southwest Iowa on Aug. 1, a 2013 model Case IH 1250 24-row planter sold for $59,000. Two days later, at a consignment auction in northeast Iowa, a pair of 36-row John Deere DB90 planters sold for $70,000 and $59,000.

The data mimic the sharp 15% to 25% drop in large, late-model used equipment values I saw in 2014 during August and September. So far this year, Case IH 1250 24-row used planters are down 23% in value, with an average auction price of just over $54,000, down from $70,500 last year. It’s the same for John Deere 1770 24-row planters, which are down 22.5% in value this year at nearly $46,000 versus last year’s average value of just over $59,000.

For top operators, staying on top of trends in used values can create tremendous opportunity. Here are my fall 2015 buying tips.

1. Buy when no one else feels like it. If you wait until year-end, you’ll compete with the annual crowd motivated by Section 179. Buy in early fall when sale prices run softer on large, late-model used items.

2. Don’t shy away from wholesale sales. Excess volumes of large, late-model used equipment are out there on dealer lots. When bidding on consignment, online or dealer auctions, know your values and bid accordingly. More times than you’d think, dealers actually let it go for those seemingly low prices.

3. Shop outside your local area. I’ve seen a 7% to 10% increase in the number of machinery auctions since June. Realize when you are calling a dealer from outside your local area, no one in that dealer’s region will know the price at which he sells you that planter, combine or tractor. That’s a little more incentive for the dealer to offer you a very aggressive sale price. 

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Comments

 
Spell Check

Roger Pohlner
Fisher, AR
9/3/2015 10:46 AM
 

  To the author: I don't see the "accompanying graph" mentioned in paragraph two.

 
 

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