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Deere's horses running up bids

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Is it possible for the value
of a 20-year-old tractor model to climb over 35% in just the last four years?

Just check out the data
table on the next page showing average auction sale price data on Deere tractor
models over the last four years. See how 4455s, made by John Deere from 1989 to
1992, have appreciated 35.2% since 2006? Amazing, but true.

This information is serious
stuff if you’ll be buying, selling, or trading used tractors in 2010. Even if
you’re not in the market, you still should keep tabs on what those used
tractors are worth sitting out in your machine shed. We’re talking your net
worth here.

Of all this auction sale
price data that I compile, I have always found it most interesting to take a
piece of equipment, see what it’s worth, then compare the machinery to the next
model series, and the next, and the next. You get the idea.

My goal is to see how much
more the newer model series are worth. Or conversely, to see how much less
older models are worth.

Examining Workhorse Deeres

For this study, I pulled
together data on John Deere tractors in the 140-hp. to 155-hp. range (see chart
on the next page). The average auction sale price data shows the newest model
first, John Deere 7820s (which were made from 2004 to 2006) and works all the
way back to model 4450s, manufactured from 1983 to 1988. See for yourself how
much newer models are worth and how much less older tractor models sell for in
this comparison.

Notice that the year 2008
appears to be the high-water mark for values on these used tractors. The same
holds true when you look at the data on most other used farm equipment. The
year 2008 was the top of the mountain. Yes, values have slipped a bit in 2009.
Still, compare that to values from three years ago, back in 2006. Current
values are still way up.

If you’ve followed my
commentary over the years, you know I don’t like to hang my hat solely on
averages or generalizations. I prefer specifics. So I present to you a data
table with 2009 auction sale prices on these John Deere tractor models, working
from the oldest 4450s down to the newest 7820s (see chart on opening page).

I have highlighted the
eye-popping prices on various models. The record-high auction price on 4450s is
$48,000; $69,000 was the new record-high sale price on 4455s. That record
lasted all of seven months until a 1991 Model 4455 with 1,423 hours (and a
Deere 280 loader) sold for $94,500 in south-central South Dakota in October
2009. The bids $80,000 (no loader) and $81,000 are at the top of anything I’ve
seen 7800s sell for at auction during the last 13 years.

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But I find it interesting
that despite all these record-high prices, average sale prices generally
slipped a bit during 2009. What does this tell me?

That the premium – a
significant one at that – farmers are willing to pay for the really good
low-hour used tractors remains in place. I’m looking for this to continue right
on into and through 2010.

What’s driving this trend?
Availability of hard-to-find, very low-hour used tractors is the number one
reason.

The second reason is the
rising price of new equipment. As any auctioneer worth his salt will bark out
when the bidding stalls, “Boys, what’s a new one going to cost you?”

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