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High Demand + Lower Supply = Hot Prices

November 24, 2020

During the late summer and into early fall, used farm equipment values rose — significantly.

Of course, the upshot in commodity prices sure didn’t hurt. In fact strengthening corn, soybean and wheat prices appeared to me to simply add fuel to the fire of rising used farm equipment values that had been building throughout 2020.

For example, let’s look at combines. Check out the very interesting Supply & Demand chart from www.MachineryPete.com based on search traffic to used combines for sale throughout 2020 measured against supply of used combines for sale.

Machinery-Pete-supplydemand_chart2
Supply and demand data on used combines for sale at www.machinerypete.com

The supply of used combines for sale on dealer lots around the country tightened while farmer 
buyer interest ratcheted up during the end of summer into fall. This jives with what I was seeing on the auction market for used combines this fall. 

The best example of strong buyer demand could be the 2019 John Deere S780 with just 138 engine hours and significant remaining warranty. It sold for $400,000 on Oct. 29 at a farm auction in central North Dakota. That was the highest auction price ever on a combine.

Buyer Hot Spots

I’m also seeing the continuation of a trend that has been in place for some time now: strong buyer interest on 1-3-year-old tractors, combines, sprayers in very good condition with low hours and warranties remaining. The other hot spot, which has been getting hotter throughout 2020, is tractors, combines, sprayers, skid steers in good condition with low hours that are about 10 years old.

A recent example of this trend on the used combine front would be the 1996 New Holland TR88 combine with just 831 engine hours (no heads) that sold for $54,500 on Nov. 7 at a farm auction in northwest Iowa. That was the highest auction price on TR88 combine in over seven years.

As farmers feel more bullish this year, used iron values are heating up. Now we face November and December. I think we’re about to reintroduce ourselves to the very powerful IRS Section 179 year-end tax motivated buyer force. Buckle up folks.

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