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Prices to chew on
It's go time.
Every year come middle of November, things begin to pick up around my office. After the slower summer and early fall months, the number and quality of farm machinery auctions begins to really ratchet up, always about seven to 10 days before Thanksgiving Day.
Yep, my favorite time of year.
With the majority of harvest work done across most of the upper Midwest, guys begin to turn their attention to next year. "What are my equipment needs? What makes or models should I be looking at? Should I buy, sell or trade before the end of the calendar year?"
That last question is key. None of us enjoy paying taxes. As December 31 begins to come into view its natural for folks to think about and begin to plan for possible last minute tax deductions they can use come April 15.
Used farm equipment is example A.
Part of President Bush's economic stimulus plan earlier this year brought the gift of allowing higher immediate writeoffs for equipment purchases. Used equipment purchases included. For a lot of folks 2008 will look on paper like a very profitable year, so the push for last minute tax deductions could be foremost in many farmers' minds.
Timeout for a little background.
I've been tracking auction sale price data now for 19 years. I've always noticed sale prices tend to inch higher beginning in mid November through the end of the calendar year. But this trend has really popped significantly the last three years, 2005, 2006 and 2007. In fact it was exactly 12 months ago, November 2007, that I began to first see signs that used farm equipment prices were going through the roof. Generalizing, I'd say used equipment values, conservatively, jumped 15% to 20% across the board, beginning last November based on the sale price data my company compiled.
So now what will happen come mid-November 2008?
Yes, there's definitely the push of buyers looking for tax deductions and availability is still an issue as in many cases new equipment is sold out into 2009. But, we're of course sitting at a very interesting time and place in our country's history right now. A new President and new policies are on the way into office, the broader U.S. and world economy appear to be grinding to a halt, recession is here, some are talking depression, the stock market is melting.
What next? Will the used farm equipment market be affected? If so, how and to what extent?
Questions, questions, questions. Fortunately the answers are streaming in day by day in the form of auction sale prices from across the country. Following is a smattering of data I've compiled in the last few days:
It's go time.
- 2003 Case IH MX285 MFWD tractor, 2,200 hours: $107,000
- 2006 McCormick CX105 MFWD tractor, loader, 250 hours: $42,500
- 2002 CaseIH 2366 combine, 950 hours: $94,000
- 2006 CaseIH 2206 corn head: $26,000
- JD 1760 12R-30 planter: $24,750
- 1999 Jetco 30-foot grain trailer: $11,200
So yes, the answers are coming in day by day. Of course the trick is to compare these very recent sale prices against similar items that sold one, two, three, six, 12 months ago. Are values holding steady? Still going up? Dropping just a bit?