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Record levels to stay on used iron

GREG PETERSON 05/03/2012 @ 2:03pm 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

At a recent retirement auction in northeast Wisconsin – on March 13, 2012, to be exact – a farmer asked me how long the high prices were going to last. The farmer who asked the question smiled. I smiled. We shuffled down the line of equipment as it sold, and we had a nice chat.

As I jotted down sales prices, I discovered there were five more record-high auction prices set on this sale, including $6,750 for a Kilbros 375 gravity wagon.

The next day I zipped up to Northfield, Minnesota. The sale was another retirement auction. This one was for 76-year-old farmer Ken Sherwin, who had a beautiful line of later model Case IH equipment.
He wondered if he should have had his sale last fall.

I reassured him that his sale would go just fine and not to worry. Sure enough, two more record-high prices were set. One record was on his Case IH 2366 combine that sold for $140,000. (The previous high price was $134,000.) The other record was set on his Case IH 305 tractor that sold for $170,000.

A few days later, I posted on my Machinery Pete Facebook page that I would be covering a March 24 auction in Jordan, Minnesota, featuring a one-owner Deere 4455.

That evening I got an email from a farmer looking to buy that low-hour 4455. But he wanted to know if I thought he would be buying at the top.

I've been fielding lots of these inquiries this year. With such an extraordinary run in agriculture, it's almost hard-wired into each of us to wait and look for the other shoe to drop. If you've been following my bread-crumb trail of record sale prices on all types of used equipment, you'll see a theme: another auction, another record high price.

So how long is it going to last?

Since last August, I've seen premium prices being paid for the really nice-condition used iron. Check the data table on the previous page for the latest proof.

Looking ahead, I believe we'll continue to see buyers strongly attracted to very good-condition used equipment. I see continued good days ahead for the ag economy, in general, given the growth in China, India, and elsewhere.

But even when things do eventually turn not so positive, I still see folks placing value on acquiring the best possible used equipment.
So whoever buys a Deere 4455 two-wheel-drive tractor with 2,567 one-owner hours two, three, five, or 10 years down the road is still going to have a very nice low-hour tractor.

A Focus on the Bidder

On a February 7 auction in northeast Illinois, a 1991 Deere 4455 (two-wheel drive) with 3,600 hours sold for $50,250. That's not quite a record price ($60,250 is the record) for a two-wheel drive 4455. What was most notable about this bid was the bidder. He was in his 80s.

But there is an X factor. When things do turn, will older farmers all decide to exit at the same time?

Recently my buddy, Dale, from Dubuque was at a consignment auction in northeast Iowa. He sat down to have lunch at the sale, and he asked the men at his table how old they were. Their responses were 78, 79, 81, and 83. Dale assumed they were all there selling equipment. But they weren't! They were all there to buy a tractor, a planter, or a disk. See the sidebar below left for one more example of this developing trend.

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