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Harvester prices take a hit

GREG PETERSON 10/01/2012 @ 10:43am Greg Peterson writes "Machinery Pete" column for Successful Farming magazine and appears on the Machinery Show on RFD-TV, talking about trends in the used equipment market

The thing I've always loved about auction price data is how very responsive it is. Demand drives bids. It's a pretty simple formula, but the facts and figures reveal very powerful and extremely insightful findings. Late-model combines are a great example.

Harvester values had been on the rebound throughout 2011 into early 2012 off a mini slump in mid- to late 2010.

Slumping prices on later-model used combines two years ago were due to an increased supply of available used units on dealer lots. It wasn't a severe problem; it was just noticeably different from the supertight supply of available good used tractors and other types of equipment at auction or on dealer lots.

After a very strong period for combine values from late-summer 2011 through the first quarter of 2012, I began to see the same issue hampering the late-model combine market. Beginning in midsummer 2012, as the drought spread its intense red color across a wider swath of the map, auction bids stalled.

Aggressive dealers

Attentive dealer groups began to aggressively market their excess used combine inventory starting in late July into early August 2012. Seemed like the floodgates had opened.

Dealer consignment auctions with 20 to 50 or more used combines popped up in Indiana, Illinois, Missouri, North Dakota, and online in the southern Plains, all within a tight window of maybe two to three weeks. I mentioned before how insightful and valuable price data can be. It's not hard to see how and why that's true in this instance.

Fluctuating values on expensive late-model combines create opportunities to save significant money when buying. But there are also opportunities to lose money if you are buying, selling, or trading without the very latest data at your fingertips.

Take John Deere 9870 STS combines as an example. In the table on the opposite page, pay special attention to the date sold. See how many harvesters came in late July and early August. That would be the floodgates I mentioned earlier.

On August 1, 2012, I covered an auction in north-central Iowa that featured two 2011 Model 9870 STS combines. The first one with 493 engine hours sold for $240,000. That's a strong price. The other one had 671 engine hours and went for just $200,000.

Analyzing the big picture, you can see how the increased supply affects values. Use the calculator pricing tool in my www.machinerypete.com website to crunch averages on both auction price and also dealer advertised price on any piece of equipment.

The bottom line regarding John Deere 9870 STS combines is illustrated in the small chart on this page. Note how the average auction price has fallen 9.3% so far in 2012, down to $170,441. If the 9870s sold the first two weeks of August are isolated, that average auction price comes in at $166,595, off 11.3% vs. last year's average price of $187,893. While the auction prices fell, the average dealer advertised price remained flat vs. last year.

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