Auction prices for good condition used farm machinery continues to set records
No, we haven’t gone over a cliff. Last month, I shared that my Used Value Index rating for the overall used farm equipment market fell for the second consecutive quarter.
This decline is driven by a growing softness in auction prices on late-model used four-wheel drive and 200+ hp tractors. Across the country, there are an increasing number of one- to four-year old tractors on implement dealers’ used lots. The extreme tightness I saw in the used tractor market going back six-plus years is beginning to ease, at least on nearly new large used tractors.
With more available used options on dealer lots, the price pressure began to abate. This started in late spring 2013 and has continued into early fall, specifically on late-model used large tractors, causing softer auction sale prices to roll in.
This must be the bursting of the proverbial bubble that folks from all points of the ag sector have been asking me about for four-plus years. "Prices on used equipment have to fall, right, Pete?" "These high prices can’t continue, can they, Pete?"
"A 1990 Case IH 7140 front-wheel assist with 3,270 hours sold for a new record price of $76,500 at a farm auction in central Iowa on July 27."
Not so fast; yes, I’ve seen softer sale prices on large late-model used tractors here lately, and combines for three and half years, but I still see exceedingly strong sale prices on good condition older used farm equipment of all types. This even includes older used combines and older used four-wheel drive and 200+ hp tractors.
Record Breakers. I deal with facts, so let me prove my point. At an Oct. 10, 2013, retirement auction in south-central Saskatchewan, a very nice 1982 John Deere 8440 four-wheel drive tractor with 5,191 hours sold for $31,000. It’s the sixth highest sale price I’ve seen in the past 17-plus years on a John Deere 8440.
How about 200 hp older used tractors? It’s the same—very strong sale prices when the nice ones show up. A 1990 Case IH 7140 front-wheel assist with 3,270 hours sold for a new record price of $76,500 at a farm auction in east-central Iowa on July 27, 2013.
Note the sale date was late July, and the "softer" commodity price outlook was already a reality. Even so, this 23-year-old 200 hp tractor sold $7,000 higher than any other Case IH 7140 that I’ve seen in the past 17-plus years. The previous record high auction price of $69,500 had just been set Feb. 15, 2013, at a farm auction, also in central Iowa.
Big ticket late-model used equipment values are a bit softer, but older farm equipment in good condition continues to hold strong.
Since 1989, Greg Peterson has compiled more than 500,000 auction prices, which he updates at www.machinerypete.com. Read his blog and watch auction videos at www.agweb.com/machinerypete. E-mail him at firstname.lastname@example.org.