The used machinery market is in a cycle of change as the whole machinery industry reacts to the change in commodity markets that are affecting farmers’ checkbooks.
Greg Peterson, known as Machinery Pete, highlighted those changes and gave a forecast of what machinery prices farmers can expect in the coming months at the Clay & Wilkin County Corn & Soybean Growers Association annual meeting Monday evening.
Peterson spoke about the six key factors in high used equipment values. The six that he sees as key factors include:
- Years of strong farm income
- High/rising price of new equipment
- Tightly controlled production of new equipment
- Low number of machinery auctions
- Historically low interest rate levels
- Tax incentives for buyers – IRS Sec. 179
“But a few of these factors are beginning to change, which is already having an impact on used equipment prices,” said Peterson. “As changes continue, used equipment prices appear to be decreasing slightly over the next few months.”
Years of strong farm income and tax incentives for buyers are a few factors that have already changed. More recently, the number of machinery auctions has seen a change from being low to increasing. Peterson said there is especially a notable increase in estate auctions over the December and January timeframe.
While Peterson says several recent auctions have been representative of the decrease in used equipment cost, he does not know for certain what the future holds. He has officially seen a clear 15 to 25 percent drop in values for late model, high capacity used equipment.
Peterson was brought to the annual meeting by the Clay & Wilkin County Corn & Soybean Growers and their soybean checkoff.
The Clay & Wilkin County Corn and Soybean Growers Association is affiliated with the Minnesota Soybean Research & Promotion Council (MSR&PC), a non-profit organization controlled by a board of elected soybean producers from across the state who directs the investments of the state’s soybean checkoff dollars into programs designed to increase the profitability of Minnesota’s soybean farmers.