Machinery Pete: Three Factors Drive Record Used Iron PricesJanuary 07, 2017
In late 2016, an interesting mix of factors worked together to produce very strong auction prices on used farm equipment in good condition. The proof came rolling in on a daily basis on a variety of farm equipment sold at auction. If you follow the Machinery Pete Facebook page, Twitter feed and YouTube channel you’ve seen the litany of examples.
The three factors behind the strong prices in November and into early December were:
- Record soybean yields
- Noticeable uptick in farmer optimism post Election Day
- The fact that the last two months of the year are the strongest time to sell.
While out and about covering several machinery auctions, I was listening for specific examples of strong prices. These conversations were also taking place on Machinery Pete social media outlets.
The very strong, and in many cases record high, soybean yields of 2016 definitely altered some folks’ outlook for 2017. More farmers were in the mood to buy used iron as 2016 was winding down.
The Trump factor is tangible. Think what you might about our President-elect, but if you would have tailed me the weeks following the Nov. 8 election, you would have seen farmers holding their heads just a bit higher.
A longtime auctioneer friend from Minnesota relayed this observation from a sale he hosted the day after the election, “People at the sale were smiling. No one was saying who they voted for, but the attitude was noticeably upbeat.”
I wrote a blog on the change in attitude in rural America on Nov. 18 and quoted a hay auctioneer friend from Iowa: “The last two weeks since the election the attitude has done a 180 out here. Farmers are smiling, feeling things are gonna turn and optimistic for the first time in a while.”
More optimistic folks equates to more aggressive bidders.
Lastly, the November-to-early-December window has become the best time to sell used farm equipment. I first noticed this trend in November 2010. If I were having my own auction, I’d do it at the end of the year.
The table below highlights auction results on a variety of equipment that caught my eye in November and early December. Note the variety in locations as well. There always has been and always will be bargain buys at auctions, but they seemed few and far between at the end of 2016.