Larger crowds flocking to fewer farm auctions
Are you a fan of jigsaw puzzles?
My wife and daughters love to work on them, the more pieces the better. Me? Jigsaws have never been my cup of tea. Guess I just don't have the patience for them. I'm ok along the borders, but once you get into the muddled middle of the puzzle I'm lost.
Often times over the years I've felt as though the used farm equipment market was one big jigsaw puzzle. I deal in snippets of information, auction sale price data from an auction here, a consignment sale there, conversations with implement dealers, ag lenders and auctioneers, day after day.
Put all the information together and the pieces start to fit into a clear picture. Here are some of the big pieces to the puzzle that are part of the used farm equipment market early in 2007.
fewer number of farm auctions around
rapidly rising grain prices
continued consolidation trend for implement dealers
continued rising price of new equipment
much of the new equipment purchased today must be pre-ordered
Start piecing these truths together and it becomes easier to understand the very, very high auction sale prices we're seeing across the country currently on all types of used farm equipment.
It all really does make sense. Take the recent report I got from a little farm auction featuring older, beaten down equipment in eastern Iowa on a recent Saturday. Saturdays used to be big auction days in the winter. If a guy was looking for a sale to attend, no problem. The local ag paper was full of sale bills. A few years back an auction with this kind of older, average condition machinery wouldn't have attracted much of a crowd, maybe 200 bidders at most.
Nearly 1,000 bidders showed up for this little eastern Iowa sale.
Do you suppose that large crowd helped push the sale prices higher? Of course. So high we get results such as a New Holland 258 rake in just average shape selling for $2,600 or an IHC 706 tractor in rough shape selling for $7,400. (Click on the links below to download a PDF for more sale price data on NH 258 rakes and IHC 706 tractors.)
With the run up in grain prices since November, guys have more money in the checkbook as well as a brighter outlook on the future. How many guys do you suppose have been putting off equipment purchases the last few years, hanging in there with what they've got?
How many of these newly motivated potential buyers do you suppose have had recent visits with their local implement dealers? Probably quite a few I'd bet.
Do you think some were disappointed to learn the cutoff date for ordering that new combine or planter has already passed? Or maybe were turned off by the sticker price on that new item they hadn't priced in a couple years?
Where are those guys going to turn to next to address their equipment needs?
Yep, the used market. And what are they finding? Fewer dealers around compared to three, five or ten years ago. Also fewer number of auctions as I mentioned earlier. So that explains why I've seen sale prices like these coming into our office.