Machinery Pete: Big Tractors Find FootingAugust 20, 2016
For three years, used farm equipment values have struggled to find a footing—but it finally happened. Values are holding steady for now, even on large late-model equipment.
Used values fell hard on large late-model equipment from the second quarter of 2013 through the third
quarter of 2014. For more than a year, reporting on used values felt like we were on shifting sands. I saw auction prices fall 15% to 25% across the board on all types and colors of large late-model equipment. That came on the heels of the longest ever stretch of strong new equipment sales and high used values from late 2007 into early 2013.
I monitor the used market day by day, quarter by quarter and year by year. High horsepower used tractor values have been flat since the second quarter of 2015. That’s the “footing” I’m talking about.
For more specifics, check out the data table below highlighting auction prices on used 300-hp tractors. Note the 2012 New Holland T8.360 with 860 hours that sold for $136,000 at a July 9, 2016, farm auction in southeast Minnesota. We filmed this sale by Maring Auction Company for “Machinery Pete TV.” The bidding on this T8.360 tractor looked as though it might stall out at $111,000, but then two local farmers went at it and drove the bids up by $1,000 licks all the way to $136,000.
In comparison, a 2013 model T8.360 with 170 fewer hours sold for less at $130,000 at a Dec. 16, 2015, consignment auction in southwest Illinois.
At a June 21, 2016, consignment auction by Sullivan Auctioneers in west-central Illinois, a pair of 2014 John Deere 8320R tractors with 2,094 and 1,880 hours came up for sale “choice.” The gavel came down on the first one at $182,000; a solid price I thought. The auctioneer, Dan Sullivan, asked the buyer, “Do you want ‘em both?” The buyer said yes.
When items sell “choice” and the buyer takes both, that tends to indicate a solid market for a particular equipment sector. This is more proof of the “footing” I see in used tractor values.
All that said, we do have an unknown in used tractor values going forward, and no I’m not talking about fluctuating commodity markets. I’m talking about lease returns. This year marks the beginning of the wave of late-model lease equipment coming back into the market. How efficiently will the used market be able to “absorb” the volume of off-lease equipment and at what price point? Time will tell.
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