Equipment you own is worth more
You're worth more than you thought you were. All that used machinery sitting out in your shed or scattered around the farm has collectively gone up 10% to 15% in value since mid-November 2006.
Ten to 15% may be a bit on the conservative side actually.
If you've been out trying to bid on any equipment up for sale at auction the last couple months, you know the score. No bargains out there at present. It seems everything has been selling on the high side.
You know why. Rising commodity prices are a huge part. The new stuff isn't getting any cheaper, and we've all noticed the marked drop off in the number of farm auctions this winter. Fewer sales, more folks looking to buy and a general positive spin on the farm economy adds up to strong auction sale prices.
So strong I stood recently at a consignment auction in northeast Iowa and watched as a 1991 model JD 4455 two-wheel drive tractor with 3,100 hours was a "no sale" at $46,000. Yep, as in $46,000 isn't enough money to let this tractor go. Wow. What did they sell for new 16 years ago anyway? Couldn't have been much more than $46,000.
Let's change colors and talk corn heads, CaseIH 2208 eight row heads. Average auction sale price in 2006: $23,125. Average auction sale price so far in 2007: $25,975, a jump of 12.3% in value.
Gravity wagons have been really hot items this winter, too. As I was walking out of the National Farm Machnery Show in Louisville, Kentucky, last Saturday evening, someone asked, "Machinery Pete what's a nice Demco wagon worth?" A lot more than they were worth six months ago was my reply. My new friend from Michigan agreed, saying boxes that had been selling for $400 now are pushing $1,000.
Ditto for DMI wagons. Back on January 10th on a very nice farm sale in east-central Illinois, a pair of DMI D470 gravity wagons sold for $6,600 each. The previous month, December 2006, three more D470â€™s sold at auction in southeast Iowa. They sold for $4,800, $4,800 and $4,850.
Looking back through our auction price data over the last 10 years, I only found one D470 sold for more than $4,850, it was just $4,900. Click on the link below to download a pdf file of more auction sale price data on DMI gravity wagons.
Another indicator of how strong this current market is?
How about the fact that so far in 2007 JD 4440 tractors, made from 1978 to 1982, are selling for an average of $20,854 at auction. The average dealer advertised sale price of 4440s on the lot? $21,254. That's a measly 1.9% difference. Six years ago (2001) the difference was 17.9% ($18,842 average auction price vs. $22,212 average dealer advertised price).
Another way to spin that data: JD 4440 tractors are six years older, but selling for 10.7% more money now at auction compared to 2001. Amazing. Click on the link below to download a pdf file of more auction sale price data on John Deere 4440 tractors.
So a slap on the back is in order. Your used equipment is indeed worth more than it was. Good news you'll be sure to want to share with your ag lender.