Machinery Pete: Used Equipment Values Continue to Hold

August 11, 2017 07:55 AM
 
tractors_farm

Back in 2011, I began producing a quarterly report. It’s a big-picture look at what is happening with used farm equipment values. The Machinery Pete Used Values Index is based on the auction sale price data I’ve compiled for over 27 years and ongoing contact with dealers, auction firms, ag lenders, brokers and farmers across North America.

As I analyzed the data for the second quarter of the 2017 report, it turned out to be one of the more interesting Used Values Index reports to date. My Overall Index rating, which attempts to capture what’s happening across all sectors of the used farm equipment market, came in at 6.6 on my 1–10 scale, down just a smidge from the 6.7 rating for first quarter 2017. For perspective, I consider a 6 rating to be normal and stable.

Finding A Foothold. But of course we all know there is no such thing as normal or stable in any market.

The fact the Overall Index rating slipped to 6.6 from 6.7 the previous quarter should properly be viewed as a reflection of continued strength and footing for used farm machinery values. We’re at exactly two years now for this trend. From an all-time high rating of 9.5 in the first quarter of 2013, the Overall Index then fell like an anchor, quarter by quarter, down to a 6.7 rating in the second quarter of 2015.

It has basically remained there, two years on, at 6.6 for the second quarter of 2017. 

To only drop 0.1 point in the second quarter is actually quite strong. The April-to-June period has historically been the weakest time of year for auction prices. The calendar years 2005 to 2015 saw a drop in the Overall Index rating every year during second quarter, with an average drop of nearly 0.4 points. 

 

Auction Bump. This year, one interesting trend that became more pronounced from mid-June into July is rising auction prices paid on very nice-condition older used equipment. So if we talk tractors, a 1997 John Deere 8200 front-wheel assist with 2,902 hours sold for $77,000 at a June 21 farm auction in central Iowa. Days later at a farm auction in northwest Illinois on July 6, a 1984 John Deere 4850 with 3,027 hours sold for $61,500—a record-high auction price by $8,500! 

The same trend emerged with combines. On July 1, a 2006 Gleaner R65 with only 1,100 engine hours sold for $88,000 at a farm auction in southeast Minnesota. That’s the highest auction price in five and a half years on a Gleaner R65.

Upgrade Opportunities. You have a tremendous opportunity to upgrade to late-model used equipment. Premiums are being paid for nice older machinery. 

Where’s the best value? It’s in the 1- to 5-year-old range. Used values have stabilized on this type of equipment, and they haven’t fallen further for two years. Dealers have a good, albeit slightly smaller, supply of really good-condition late-model used equipment for sale. And there’s still an elevated number of machinery auctions taking place out there.

The rest of 2017 will be a great time to buy. 

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Comments

 
Spell Check

Dave
Clive, IA
8/10/2017 01:46 PM
 

  I believe if you wait for better prices you waited to long. Seems to me the used equipment is a bargain now if you have the cash flow.

 
 

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