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Squaring up the Baler Market

We recently worked with a major farm publication on an analysis of the forage market. While we’ll wait for the publication to be released for the full story, the analysis did tie together a few bits of information that we’d like to share with you. We’ll post the link to the article once the magazine hits the shelves!  
As I was doing research on this article, it brought back mixed memories of being stuck up in a hayloft on a hot Iowa summer day. Trying to see and breath through the dusty haze (face masks were not quite as in vogue as they are now), and working my tail off to keep from being buried in bales sent up by my friend’s older brother from the hay rack below.  
Times are a little different now with larger operations and larger balers, resulting in fewer farmers having to go through the summer routine of baling and storing small square bales. A small part of me is nostalgic for that bygone experience. However that part was forcefully made even smaller a month ago after loading and unloading the trailer shown below.  Conversely, the parent in me does want that experience for my kids. Mostly so that I can give them something time consuming to do during this pandemic’s stay-at-home period.

Analyzing the Square Baler Market

In the initial analysis for the publication we used Tractor Zoom’s extensive database to examine the round baler market. This exploration discovered that there appears to be more advantageous time of the year to buy and sell round balers. I wanted to test if this seasonality also held true for square balers. The second test was actually brought to my attention by a farmer while unloading that trailer of bales at the sale yard. Will the prices of these balers decrease with fewer farmers baling small square bales? A price decrease would be logical considering basic economics, but we may hit a point where these pieces of equipment are scarce and produce a product that is novel with a premium price. Think $10 straw bales at a landscape store or farmers market! A similar script has played out in the music industry with vinyl record players enjoying a strong reunion tour. 
To test for seasonality, we analyzed over 500 square balers sold at auction over the past two years.  To compensate for the extremes on both the high and low price points, we plotted the median price (price that is in between equal number of higher and lower prices) for each month of sales. 
This compensates for the handful of behemoth square balers out there, as well as the few given away for pennies. This graph can be seen in Figure 1 below. The size of the squares in Figure 1 represent the relative number of balers sold in that particular month. March ’20 had the most sales (38). January ’20 had the least (4). 
Figure 1. Median Price and Relative Volume of Square Balers Sold by Month
The median price graph does not tell the whole story, yet when compared with the average sale price by month in Figure 2 below, the seasonality you see starts to be reinforced. In Figure 2 the average price seasonality, which combines sales data from 2018-present) can be seen to closely follow the median seasonality shown above. The relative size of the squares in Figure 2 represent the variance of the prices (extent to which prices vary in that month). Essentially, the large squares of Dec., Feb., and March are months where we see a wide spread of sale prices.  Likely the result of large square balers hitting the market. If the sale price is fairly consistent, like in the summer months, you see smaller squares. 
Figure 2. Average Small Baler Sale Prices and Price Variance by Month
So, if you are looking to purchase a small baler at a lower price, keep your eye on the auctions at Tractor Zoom during the summer months. Obviously not the easiest time for many farmers who have a second cut waiting in the field. This may be the reason why the price is lower?
Now, if you are looking to sell, December is a time when farmers may be looking to improve their fleet, and leverage some tax deductions. February and March also appear to be good times for sales, perhaps because buyers are preparing for the upcoming season. 
The final question regarding the longer term trend of square balers is harder to answer. When analyzing the annual average sale price, the three year trend is certainly upwards. BUT, keep in mind that 2020 data so far may be misleading since Jan – March are higher than average sale price months. We’ll have to revisit that question once 2020 is over. 
Figure 3. Square Baler Sales by Manufacturer
One final unexpected, but interesting piece for you. Figure 3 above depicts the sale location of square balers across the US over the past three years. Sorry that the map colors look like a Christmas tree, but that is the reality of the crowded baler market.  An interesting note here is the manufactures’ market share in certain geographies. You can certainly see where particular brands have dominance. Also, the larger circles depict larger sales (i.e. large square balers). Makes sense that you see them in areas with a lot of ground to cover and large cattle herds. 
So whether your farmer is looking to purchase a better square baler to support his operation, or simply something to keep the kids busy, hopefully this information will be beneficial for you and your clients.