Unprecedented Prices on Used Combines
Typically, late-model combines (five years old or less) experience a price spike as harvest approaches. This year will be the unprecedented exception to that rule.
Current values of late-model combines are roughly a third lower than just a couple of years ago due to all the inventory clogging dealers’ lots.
This massive supply of iron, combined with lower commodity prices, is retarding the sale of new combines. As of May, new combine sales had fallen 40% since January 1. Compared with May 2014, harvester sales are down 31%.
Future shortage of late-model combines?
Encouraged by manufacturer incentives, dealers will aggressively liquidate late-model stocks in the next six to eight months. To do this, they will employ a number of tactics that include offering favorable financing (no down payment and reduced interest rates) and certified used programs (that extend warranty coverage) in combination with liquidation sales at consignment auctions. In the meantime, new combine sales are expected to remain sluggish, at best, in the near future.
This merging of liquidating used inventories, along with fewer new harvester sales, is potentially setting up a shortage of late-model harvesters in the future.
Reaching the bottom of a price decline
The upshot of all these trends is that we are reaching the bottom of the downturn in late-model combine values. Case IH combines, due to that manufacturer’s vigorous work in disposing of excessive used inventory, may already be in that trough. That’s why this issue’s Pocket Price Guide (on the next page) features late-model red harvesters.
- See price trends for Deere harvesters
If you are looking to upgrade your harvesting capacity or you are needing to add a second or third combine to your fleet, now is the time to buy. That recommendation is based on a wild card that has to be played by Congress. If lawmakers finally and permanently raise Section 179 depreciation to $500,000 yet this year, values of used combines are poised to rise. This will be the case if commodity prices strengthen.
“We are definitely reaching the bottom, valuewise,” says Rick Vacha, regional sales manager for Ritchie Brothers Auctioneers. “Significant dealer liquidation has already taken place and will continue in the near future. So now is definitely the time to buy used combines.”
Time to move on low-hour harvesters
Another factor to consider if you are on the fence about buying a late-model harvester is the wealth of low-hour machines on the market right now. “Before, farmers were often turning combines over every year or couple of years,” Vacha says. “Now, they are holding on to machines longer. That means the late-model market in the future will consist of combines with significantly more hours than we’ve seen in the past.”
Next Page: Pocket Price Guide
Vacha’s points are echoed by other used iron sellers. Scott Steffes of the Steffes Group expects a big push by dealers to liquidate combines in these months before harvest. The added lure of certified used programs now offered by all manufacturers will further excite purchases.