High demand, low supply send planter and combine prices to the moon
Equipment demand is at all-time highs. At the same time, supplies of new and used equipment are at all-time lows. Machinery Pete Founder Greg Peterson says those two factors are driving the skyrocketing machinery market.
“Just-in-time manufacturing developed over time, so dealer inventories are being forecast tighter and tighter,” Peterson says. “In the used market, farmers are seeing rising prices on the auction front, which makes them even more aggressive.”
In 2022, he says, two surprising trends have developed.
“In 32 years of tracking the market, I’ve never seen anything like the heat we’re seeing in the used combine and used planter markets,” he says. “If you took a time machine back two years and told people what we were seeing today, they would look at you like you were from Neptune.”
WHAT HAS CHANGED?
Peterson says there has never been as many used combine price records as he is seeing in today’s market.
“It started to rise in 2020; it went vertical in 2021,” he says. “But today it’s the hottest combine market I’ve ever seen. The whole sea level has lifted on all makes.”
In addition, Peterson reports a faster rhythm for the new records rolling in. It used to be one-off record prices on combines, but in 2022 he’s seen new ones every few weeks.
Fueling the aggressive demand for combines is the farmer anticipation of “go time” during the harvest season.
“Dealers don’t have backup combines, and they don’t always have every part,” Peterson says. “Last fall, it was spooky. We heard farmers drive over 400 miles for a part for their combine. We were fortunate the weather was cooperative last fall and the harvesting window stayed open. But when farmers have to go, they have to go.”
So, a new concept has come to light — the farmer hedge in buying extra equipment to have on hand just in case.
SORE SPOT TO SHORT SUPPLY
That leads us to Peterson’s second “makes him blink” market reality — heat in the used planter market.
“There’s always been an oversupply of used planters,” he says. “But in recent years, we started to see more farmers snatch up used planters to have on hand to be able to run more machines when the weather cooperated. Before, I was not able to deem it a trend, but today, I can say it’s a trend.”
He says this includes row crop planters as well as air drills and no-till drills. The whole planting category is high.
A DANGEROUS ASSUMPTION
Peterson sees danger ahead for farmers waiting and counting on used equipment values to soften markedly whenever profit conditions in ag eventually shift downward.
“Here’s where history is working against you,” he says. “Coming out of all past up cycles in ag there was always excess late-model, used inventory available. You could count on there being super deals in the used market.”
But consider the lower level of new equipment sales from 2014 to 2019, Peterson says.
“You can’t snap your fingers and make more 3-to-8-year-old used units,” Peterson says. “Compared to three years ago (2019) our data at MachineryPete.com shows 80% fewer 5-year-old 175+ hp used tractors for sale and 66% fewer 3-year-old 175+ hp tractors for sale.”
Peterson says all signs point to this historic tightness in the used equipment market being the norm for a while.
Watch Machinery Pete illustrate the trend of farmers buying used equipment as a hedge:
Margy Eckelkamp reports on ag retail, input trends, machinery and technology. She also follows the new and used equipment trends alongside Machinery Pete.
