Preparing for Early Planter Orders5/26/2022
Let's be clear. Valuing a planter is one of the most difficult parts of the job.
In just the past week I've heard this from both Senior Chattel Appraisers on the lending side and some of the most respected used equipment managers on the dealer side.
Planter values may not quite carry the weight of a combine on the balance sheet, but the variability is immense. In fact, for the top twenty sub-categories in Tractor Zoom's equipment database, ranked by average sale value, planters have the highest variability of all of them. (If you're curious, cotton pickers come in second).
There might be just a few more rows and options on today's planters.
A good way to control for high variability is more data points. This is why we've been working with our dealers on an early order period report on planters. If you'd like a copy, reach out to us. The data points you are considering should also be as close to your model as possible. That is why we've been customizing this report by OEMs as well as specific models within the brand. You can see a snapshot of the report below. This view is broad, including all makes/models and size of planters from 12 to 35 rows.
The more specific your comparables are, the better. This is why the pictures and filtering within Iron Comps is so important. What is also needed though is the trajectory of the market. These planters may not be traded in for another 6 months (or more?). What will the value be then?
To help with the future trend of the market, we've included graphs of the corn and soybean markets, as well as interest rates. Through our analysis we've seen significant correlation to the corn market. For instance, when looking at 24 row John Deere planters, a $1 increase in the corn market has shown to increase values by 4-15%. That is still a wide range, but so are the values of different 24 row planters. The interest rate is negatively correlated, where 100 basis point drop in interest rates coincided with a 4-10% increase in values. NOTE.... Correlation is not Causation. There were a lot of other factors at play when interest rates were dropping that could have caused the planter values to increase.
That last point is a good reminder that when attempting to place a value on something with high variability, the more data and sources of trusted and quality information you can pull from, the better. This is why in the report we also reference the trending dealer listings data, which is much less volatile with typically more reference points to compare your planter against.
Again, whether you are valuing a red, green, white, blue, or some other color of planter, feel free to reach out to use if you'd like a similar planter report. We'd be happy to share and discuss it with you.