Iron Comps' 2nd Quarter Farm Equipment Value Report7/25/2020
Our second quarterly installment of the Iron Comps large equipment market report spans a time in agriculture that is anything but status quo. Yet, as you will see on some of the reports, the average sale prices fetched at auction have been very close to last year's trends. The volumes, however, are a different story.
This report covers four high value categories of farm equipment. Combines, tractors with over 100 horsepower, four-wheel drive tractors, and planters. Below you can see the reports for each category. If you would like to have the whole report in PDF form to easily share, feel free to reach out to us here and we'll email your copy.
Due to planting, the months of May and June are not a particularly heavy time for these pieces of equipment to move at auction. Due to COVID, the whole last four months have also not been particularly easy to do anything, including holding auctions. Yet more auctioneers moved online and, with the exception of estate auctions, many were still held.
Overall, the value of machinery in April, May, and June held steady despite strong headwinds of a deteriorating ethanol market, uncertain China trade, and COVID disrupting our food supply chain. The volume hitting the market were suppressed in May only to fully rebound in June when many states opened back up in June.
As a result of this, it appears that values in May dropped, but this is likely more the case of farmers and auctioneers not wanting to sell high value equipment when the buyers may not be there. Instead they likely held on to many of those 'peaches' to be sold at a time when more buyers would bring true market value, in June. You can see this in all of the reports below. Keep in mind when viewing these reports that they only contain auction values that are greater than $25,000 or $40,000, and produced since 2000. This helps eliminate run-down equipment that can significantly throw off an average. The specific constraints are shown at the top, in italic print under the title.
Starting with combines you can see the auctioneers holding back in May and releasing that volume in June. The exciting times for combines happened right after the end of Q2, in early July with the large Sinclair auction. The excitement will continue into August, as you can see in the lower left graph, with the seasonal sales bump next month when we can expect a lot of combines to exchange hands.
Moving on to tractors, we split these next reports into 100+ HP and four-wheel drives. One of the biggest take-aways is how close the 2020 average values mirror those of 2019 in the lower right graph. In the past we've seen tractor auction values slide well below seasonal values when the external market hears especially negative news. A good example of this was the breakdown in China trade talks back in August of 2018. With estimations of 30-40% of farmers' profitability deriving from government aid programs this past year, there is the concern of what a non-extension of these aid programs would do to equipment values in the coming months.
Finally, planters are heavily traded in the months preceding spring planting season. While the average price is higher than Q2 in 2019, there were not enough sales this last quarter to reflect any significant difference in farmers' willingness to pay.
While the Q2 report is good to understand what has moved the market, and where it is heading, the reality of ag equipment is that the market is much more volatile that it used to be. The Sinclair auction on July first taught us that. Below I've taken the Q2 combine market report and expanded the dates to include all of Q2, and July up to the 26th. You note the especially big jump in proportions of John Deeres sold at auction. Biggest of all is the average sales premiums that those S680's brought.
If you currently do not have access to Iron Comps, please reach out to us here and we'll get you set up to start learning from farmer's buying behavior just like you saw in the video.