Remove Emotion: Seize The Market

November 28, 2018 10:00 AM
 
Recently, more folks had to update their equipment, and there is less of a used glut. As a result, new equipment sales rose and used values are strong. 

The auction price data I’ve been compiling for 29 years shows 2014 was the worst of  times, with used farm equipment values sliding 15% to 25% lower across the board. This was across all makes, models, equipment categories and color lines.

Then from 2015 to 2017, we saw a large spike in the amount of 1- to 3-year-old equipment sold at auction. This is really quite fascinating data, if we chew on it a bit. Look at the super low level of 1- to 3-year-old equipment sold at auction back in 2008 and 2009 (when the good times in ag were just starting). 

This makes complete sense. Why would anyone quit when times are great? 

In 2010 to 2012, this category of equipment sold at auction jumped higher. Equipment dealers were handling the spike in new sales and increased high-price trade-ins. The pain didn’t set in until 2013. 

[Pete’s Tip: The time to be aggressive is when others are pulling back.]

Look at the spike in number of 1- to 3-year-old equipment sold in 2015 and 2016. Dealers were adjusting down their used inventory levels and more farmers were deciding to retire and, in the process, sell their “like new” farm equipment.  

This brings us to 2018 and the significant drop (38.5%) in the number of 1- to 3-year-old equipment sold at auction from January through September versus the same time period in 2017. 

This drop in late-model used equipment sold at auctions coincides with rebounding buyer demand, both for new and good-condition used equipment. Take the John Deere S670 combine listings on MachineryPete.com. There are eight 2017 models for sale, 17 2016 models, 27 2015 models and 49 2014 models. 

Auction prices have been strong on 1- to 3-year-old farm equipment through this fall. For example, a 2017 John Deere S680 4WD combine with 4 separator hours sold for $360,000 (no heads) at an Aug. 15 auction in west-central Michigan (the highest auction price ever on combine in U.S.). Also, a 2015 John Deere 6155R with 2016 hours (no loader) sold for $114,000 at a June 15 farm auction in northeast Kansas (a record price for 6155R sold without a loader). 

Buying Opportunity. These examples take me back to my November 2015 Farm Journal column where I did something I rarely do: I strongly advised readers to take action. I suggested it was time to upgrade into late-model used farm equipment. That time period provided a tremendous value opportunity, as most folks were in pull-back mode. 

Recently, more folks had to update their equipment, and there is less of a used glut. As a result, new equipment sales rose and used values are strong. 


Greg Peterson is the most trusted name in farm equipment. Since 1989, he has worked with a network of 1,000 auction companies to track used equipment prices. His website, MachineryPete.com, features equipment listings from dealers and equipment for sale at upcoming auctions.

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