Combine Values and Supply Strain Continues to Grow
Fall may be a long way off for America’s farmers, but many are already thinking about how they are going to harvest a 2022 crop that is not even in the dirt yet. Concerned farmers eager to secure their equipment catapulted combine sale values in December. That is, if they could find them. The supply of quality harvesters was almost half of what was during the same period in 2020. December is typically a heavy season for moving harvesters and a good benchmark in establishing values. It is unlikely to see supply increase and values drop anytime soon.
This Iron Comps analysis on combines is part of an entire year-end look across all major farm equipment categories. If you’d like to see the whole analysis that includes combines, all tractor categories. sprayers and planters, you and your team are welcome to join us for upcoming webinar. Save your seats here. The focus will be on equipment trends and using Iron Comps for a more automated equipment appraisal process.
Back to combines. To increase accuracy, we looked at over 400 harvesters that were less than 20 years old and sold only in December 2020 and 2021 auctions for more than $20,000. In December of 2020, the average sale price was $106K. Compare that with $129K this December. A 22% increase! 2021 models also had an extra 173 sep hours on average. If you want to normalize those figures , that extra usage could equate to an additional $8.6K in equivalent value and 8% in year over year change. Remember that 2020 values finished the year strong. This makes this price leap even more impressive! Figure 1 below compares this value change in comparison with the supply.
(If you are looking for the 'missing' other categories, join us for our webinar on January 26th to see the whole analysis!)
There is no doubt 2021 was a highly profitable farming year for most farmers. More cash on hand, with an incentive to reduce taxable income drove values up. So did an already short supply of available harvesters. The two are inextricably linked, with the former making the latter even more challenging. In September we presented on combine year-over-year values and supplies. At that time supply was off 35%, drug down by a slower than usually August auction season. Corresponding values were up, but only by 10%. A modest increase when compared with the tractor market at that time. Fast forward to the end of 2021. Available sales in December were down 47% from the previous year, which helped lift the 22% - 30% price increase mentioned earlier.
Going forward, the profitability of farmers in 2022 has a steeper hill to climb with soaring input costs. Equipment included. Current commodity prices are justifying those costs, but strong markets are not one of the few certainties in life. Tight equipment supplies will be a short-term certainty though. Watch Iron Comps values more frequently this year to determine if we continue to climb or plateau. If you are interested in this analysis for other equipment categories, remember to save your seat for next week’s webinar here. Hope to see you there.