Farmer budgets for buying new equipment and lending activity for those same new purchases have tightened up as we head into spring planting. Those two factors have the used auction circuit humming. Historically, buying activity slows down significantly after St. Patrick’s Day.
The people that pay close attention to such things – Machinery Pete among them – are seeing good condition, late model equipment prices trending up. Farmers may not have a loader full of money to spend in the current business climate, but they still know exactly which machines they need to put in a profitable crop, and they’re willing to execute a buy if the price and machine are both in good condition.
“We’re still seeing the dollars, and maybe as farmers the belts are tight out there, but its sort of on a need basis,” Pete says. “You know what you need and the right piece comes along, that’s where you can get three or four farmers that want the same thing, and the price starts creeping up a little bit.”
Pete cites a couple examples from this past week:
On Saturday in Oklahoma, a 2020 John Deere S780 combine with 1,250 hours (above) sold for $245,000. Pete says a month ago this same model was struggling to hit $200K, but his data shows a 10% increase over last year on that model.
On Saturday in southwest Minnesota, a 2011 Case IH Magnum 315 tractor with 1,678 hours on it in “beautiful condition” went for $155,000. That model’s average auction value is up 8% from last year.
Casey Seymour, with over 20 years of experience in the used equipment auction space, adds that no one is “pushing the panic button yet” about tariffs driving up the cost of new equipment, and the situation is increasing farmer interest in buying used. But wait 12 months and that could easily change.
“This is a short-lived thing, and the equipment manufacturers are going to figure it out and it’s going to be a nine or a 12-month [production] slowdown,” Seymour says, adding he has yet to hear any alarm bells going off from his contacts in the equipment world.
Trucking Company Talks Equipment Hauling Business
Parker Johnson and Brad Grafe from Valley Transportation gave a quick summary of what they are seeing in the equipment hauling industry. The company has its own fleet of fully insured heavy equipment for shipping farm equipment, manufactured goods, and construction machines all over the country.
Of late, the guys at Valley are seeing a slowdown in quote requests for handling and moving new combines, while quote requests for delivering a new planter for the spring planting rush are up.
“I love this time of the year, it’s always that last minute push – that’s about 90% of this business,” says Johnson. “Most guys have been waiting and waiting and waiting to see what’s going to happen (in the market) and it’s getting to be do-or-die time.”
For anyone with the right equipment, skillset, and background that is looking to get into hauling, Valley is looking for good people, Graph adds.
“We’re always looking for good owner-operators,” he says. “We have trailers, or we’ll let you pull your own. We’ll work with guys that way, too, and we have the freight to keep you moving.”
How To Get The Most From Your Trade In
Aaron Fintel, a used equipment specialist with 21st Century Equipment, stopped by to chat with Seymour about how dealers are approaching the trade-in/dealer consignment process. With a glut of late-model equipment still sitting on equipment dealer lots today, there can often be a disconnect between the price the farmer wants to take home for a trade-in and the price the dealer offers, he says.
“From a dealer standpoint if we think we can steal it, we know we’re not going to get it,” says Fintel. “The internet has shrunk the world to a grain of sand, man. There’s enough information out there that everyone can see exactly what it’s worth.”
Seymour adds that, ultimately, the consignment route can be a “great way to test the waters on what you’re trying to do” and it is wise to work with the used equipment buyer at your local dealer so both parties can remove emotion from the process, understand why the price being offered is the price being offered, and come away from a trade-in deal feeling good about it.
Commodities Markets Update
Shawn Hackett, principal, Hackett Financial, is concerned U.S. cotton acres won’t be able to meet even recessionary levels of demand. That’s because an ongoing drought in Western Texas cotton country is forecast to continue well into the summer and USDA estimates of dryland cotton abandonment acres could turn out to be “way to low.”
“We’re thinking we could really be behind the eight ball, because if you don’t start off planting enough, it becomes very hard not to create a supply issue later on in the season, especially if there’s any weather issues,” he says.
Hackett also looked at the global oil market, which he says is a difficult market to feel positive about with Saudi Arabia running at excess capacity, effectively flooding the global economy with cheap crude oil. He sees a price spread developing with prices in the mid-50s as the floor and a ceiling of $70 per barrel.
“Right now, we’re pressing the lower side because of the tariff war,” says Hackett. “I do think Trump wants to make an announcement about refilling the petroleum reserves when oil prices are near 55, so if it rallies to 65, he’s still happy. I think there’s chess being played here between announcements, price and how this all plays out.”
