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Top-End Planters' Disappearing Act

2/19/2022

Last week our team was putting the final touches on the Tractor Zoom 2022 Farm Equipment Outlook presentation at the National Farm Machinery Show in Louisville Kentucky. We summarized 2021 planter sales price and volume. Values were up. Supply was down. Just like you'd expect. Except Q4, December in particular, was not what I expected. Auction volume grew considerably and average values dropped. When this happens, it typically indicates lower quality machines hitting the auction block. But in December? That is when I would have expected the highest quality machines to sell for top dollar... unless there weren't many quality machines?
Measuring the actual supply of quality planters on grand scale can be difficult considering the customization that can take place on each planter row. In this analysis we started at a 40,000 ft level by looking at the entire planter market, then dive down to some of the more popular models to see if the trends we are seeing at a high level are still relevant.
The 2021 Q4 data above may be indicating a 'skimming' of the supply. The available equipment was being drawn down, but not equally. We spoke about this briefly in our webinar last month where the spike in demand and price for planters was isolated to just 24 rows and greater. Planters smaller than that were nearly untouched by the equipment inflation we've been seeing, an insight we shared with farmers on Tractor Zoom last month. Another indication of this skimming is the steady decrease in average price of planters on dealers lots. As the high-priced planters leave, the remaining average is lower. Farmers are skimming the best they can find, leaving the rest behind. You can see an example of this in the gif below using Iron Comps' new embedded Dealer Trends function for all 24 row John Deere planters at dealerships (blue line) and auctions (green dots).
The gif below is specifically for the John Deere 1775NT 24 row planter. You see a similar trend here.
Despite our team continually adding more dealer groups and their equipment on Tractor Zoom at a blistering pace, planter supply can't keep up. You can see the available volume (above) in the upper left corner of the pop-up trend box below the changing average price.
A disproportionate demand should be expected with so much difference between these implements. Farmers certainly have their preferences (high speed, precision planting capabilities, central fill...) and many have tractors specifically purchased to pull these planters. Some of this decrease in supply should be expected as dealers would prefer to draw down inventory on their books leading up to planting. What challenges will this present the farmer who is still looking for a planter this spring though? The result of this skimming could be a more accelerated inflation of top planters in the next two months and a prolonged period (years?) of high planter prices as the backlog builds behind OEMs manufacturing lines.
If you are interested in the new Dealer Trends analysis that was used above, reach out to us and a member of our team can walk through how to access these insights.

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