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Used Harvesters Flood the Market

Bidding at a consignment auction that I recently attended matched the weather that day: cold. For example, I watched bidding on a 2006 John Deere 9660 STS in excellent condition, with 1,637 separator hours, front duals, and rear-wheel drive. It stalled at $90,000.

A year ago, sales on similar harvesters would have flown past $90,000, climbing to $120,000 before the serious buyers locked horns to see who got to take it home that day. In fact, I saw the twin to the combine described above sell in South Dakota last August for $122,500.

Is there a glut of good used harvesters?
I don’t want to say there’s a major trend in combine values based on the sale of just one combine. I compiled data on 70 series (models 9570, 9670, 9770, and 9870) Deere STS combines that have sold at auction (live or online) in a recent four-month period. All told, 127 of those harvesters changed hands. You’ll see some of those sales in the Pocket Price Guide on page 27.

By comparison, that is twice as many 70 series combines as those sold for a four-month period prior to mid-September, which is considered the peak of the season for used combine buying.

I also checked John Deere’s dealer listings at machinefinder.com. There, I discovered that in one day alone (in late May when I wrote this story), a massive 819 series 70 combines were sitting on dealers’ lots looking for homes.

That’s proof there’s a good supply of used harvesters on hand. The big question is, what effect is that supply having on prices?

It has already depressed values, as was revealed by a comparison I ran of Deere’s most popular 70 series model, the 9770 STS.

The average bids for 4-year-old 9770s has been as follows:

  • $122,175 during winter-spring 2014 (for 2010 models)
  • $143,900 during 2013 (for 2009 models)
  • $137,900 during 2012 (for 2008 models)

So, 9770 values at auction have dropped by over $21,000 in just six months. I can’t help but think this is directly the result of harvester supplies.

It’s not surprising this drop in value is occurring. Farmers, particularly in the Midwestern states, have been turning over combines at a rapid pace during the last decade, due to above-average commodity prices. Rapid write-off and accelerated depreciation fueled this buying spree. As a result, the market is filling with these rollover harvesters. Dealers’ lots are beginning to look like they did in the mid-1990s, when we last had a glut of combines, due to aggressive lease-and-roll plans.

You probably remember what happened in 1996 and 1997 when combine values plummeted to less than half their estimated value at auction.

Fortunately, today’s situation doesn’t compare with the mid-1990s. Even with corn prices below $5, farmers are making money and are carrying little debt.

Preharvest prices
It’s important to remember that combine prices traditionally go up just prior to the fall harvest season.

“That is a well-established pattern,” says Scott Cook of Cook Auction Company in Clinton, Missouri. “For example, we saw used grain cart values drop as much as 20% to 25% last winter. I expect they will recoup all that loss in August and September.”

Buying recommendation: Go bigger, save $$$
Taking a closer look at the price averages and ranges on the next page confirms a buying recommendation I made last fall regarding Deere STS combines.

That suggestion: When shopping for a replacement for your current midsize harvester, seriously consider buying the next size larger combine. Doing so will get you more harvesting capacity for less money.

A good example of this would be 9650s vs. 9750s. On average, 9750s sell for $640 less. True, that difference is a toss-up. My point is that you can get a bigger combine with substantially more harvesting capacity for less money by going with a 9750. The same is true of 9760s vs. 9860s. The latter combine sells for around $1,500 less, on average.

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Editor's Note: The Machinery Insider is written and compiled by Machinery Director Dave Mowitz.

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