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322349

Now is prime time to buy a combine

Buying a combine just after the first of the year is certainly counterintuitive. The height of used combine sales is typically during the summer.

But I contend that this year January and February are the prime times to shop for a late-model harvester.

I base this on these observations:

  1. Manufacturing supplies (from computer chips to steel) will continue to be tight. Industry leaders have told me that shortages will continue to plague us during most of 2022. This makes the chances of getting a new combine by this summer questionable. In that regard, I cannot stress how important it is for you to work with your dealer to put in a purchase agreement now if you hope to get a combine by harvest.
  2. Second, dealers took in a slug of 2021 model year combines after harvest last year, thanks to lease rolls and trade-ins. I took a head count at press time and discovered just short of 400 one-year-old harvesters were sitting on dealer lots. That’s a significant increase in year-old combine numbers compared with the previous year, when 270 combines were on hand during the winter. Considering the interest in new iron these days and the pent-up demand last year’s shortages created, these combines won’t be hanging around very long — so now is the time to buy.
  3. Dealers, who have gotten used to not carrying substantial “floor plans” of used equipment and the interest payments that go along with that, will be in a good mood to move those combines out this winter. They want to stay lean on used inventory. As a result, they may be more willing to dicker on a final price even if it is a seller’s market.

OK, I’ll admit that this last point may be wishful thinking. I was trying to find a silver lining in this seller’s market.

Case combine harvesting near sunset.
David Ekstrom

High-Water Mark 
On Used Iron Values

The fact is, we are looking at the high-water mark on late-model used equipment prices — actually all used equipment prices — for the next couple of decades.

Eventually, new equipment will start flowing out of manufacturing plants in a flood to meet demand. This, in turn, will start filling the market with late-model machinery a couple of years later, and prices will stabilize and drop.

Remember this seller’s market benefits farmers looking to trade in equipment as well as dealers trying to sell it. If you are looking to move iron, then bargain hard for what you own. 

Before negotiating with your dealer, cruise the internet to vacuum up asking prices for equipment similar to the machine you are trading in or selling. (More and more farmers are going to private treaty sales on their iron.)

Let’s talk price whether you are trading in or buying. I reviewed the lowest-hour Class 8 model year 2021 combines sitting on dealers’ lots. You may suffer sticker shock from these prices. There are a lot of combines selling in the high $400,000s. When I looked into older low-hour combines, I found list prices were just as high for 2020 and 2019 model year combines, testifying to how tight the market is.

Prices finally “normalize” once you get beyond machines that are 5 to 7 years old. However, there are price exceptions when it comes to low-hour combines. 

Just How Tight 
Are Used Equipment Supplies?

By Andy Campbell, IronComps.com

During the last harvest, combines started showing their age. Farmers replaced the drum, sieves, numerous belts and bearings.

Before long the repair bills were outpacing the cost of upgrading to a new or late-model harvester. In the meantime, the news has focused on how empty the supply chain has been in the past year. 

Yet rarely have I seen reports showing just how short the used equipment market is. I can see all the open space at my local dealership, but how has the used auction inventory changed?

Tractor Zoom covers more than 75% of farm auctions across the United States. With this data I calculated the percent change in equipment sold per auction house so we can see the trends year to year. 

2019 2020 2021
100 to 174 hp. 25% 25% 34%
175 to 299 hp. 8% 1% -11%
300 or more hp. 4% -2% -13%
Combines -3% 8% -26%

The graph below illustrates that information for combines as well as the three horsepower ranges of tractors. All machines in this data set were sold at auction for more than $25,000.

29096_graph

3 Key Takeaways

From this data, three thoughts jump out at me.

  1. The farm equipment market is not uniform, as you can see by utility tractors. A whole paper could be written on the reasons for utility tractors’ rapid growth at auction, but what you need to know is that values should be holding steady, and not increasing at the rates of their bigger brethren.
  2. Have a combine succession plan. The biggest decline is in combines. Part of this slide can be blamed on the proliferation of good combines at auction in 2020, but even considering that, combine availability in 2021 is down 20% from 2019 levels. Even if your harvester has a year or two left on it, this gap in supply will take longer than that to work itself out. Start searching now and be ready to purchase when you find what you are looking for. Many sales are happening before equipment hits the lot and above the asking price.
  3. Higher prices obviously follow the current supply and demand situation. What is less obvious is that repairing a machine becomes a better option as prices rise. Because of that, mechanics and parts will increase in demand and decrease in available supply even more. I would expect farmers to demand even better pictures and proof of a machine’s quality going forward so they can try to avoid repair costs.

As challenging as this market is, the perception of tight supplies can be just as impactful. Treat equipment like land. Know what is available and be ready to act when the price is right.

Because of this situation, Tractor Zoom has set up a “saved search” feature so farmers can receive a weekly email linked to all the new dealer and auction equipment that fits their criteria. If this tight equipment market behaves anything like my local town’s housing market, the next move will be that equipment on dealer lots will be measured in days, maybe even hours, not months, and don’t be surprised if more auctions set up an eBay-type buy now option.

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Machinery Talk

Most Recent Poll

To meet my machinery needs in the next year, I’m

holding off on buying and working with what I have
43% (29 votes)
I just want to see the responses
30% (20 votes)
looking online for deals
13% (9 votes)
sticking to my dealership
7% (5 votes)
hitting the auction market
6% (4 votes)
Total votes: 67
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