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This installment of Trade Values & Trends looks at the resale values for used Class V through VIII combines and corn and soybean headers over a four-year period.
Figure 1 shows that the average sale price for used combines is increasing from year to year. As technology in complex equipment such as combines continues to advance, farmers have an incentive to buy the latest machine, whether it’s a new or good used unit. New equipment prices have an effect on used equipment sale prices. As they rise, values have a tendency to filter down to used equipment.
When looking at the average sale price and the month in which the sale is reported, it’s important to remember that the data given to IRON Solutions lags by about a month. For example, a dealer who sold a combine in December 2010 probably didn’t report the sales until the end of the month. Those transactions would be input and reported as January prices.
The chart also shows that the average price is higher in the winter and the first of the year, after harvest. That’s when combine roll programs come into play. If a farmer is going to trade for higher priced new models, dealers will get a higher average price. As combine sales move into the summer, dealers are likely to sell expensive used machines while taking smaller, less desirable machines in on trade. Toward the end of the season, dealers will be selling the less desirable combines at lower prices.
Figure 2 shows that the average cash value for used soybean heads is also trending upward, while the sale prices are low compared to the corn heads. Early in 2011, corn heads are showing a slight decline in average resale value, although it’s reasonable to think the trend will continue upward as dealers enter the busy combine selling months this summer.
IRON Solutions’ data also shows corn heads are being traded more often than soybean heads. The average age of a soybean platform is a little over 7 years when it’s resold, while corn heads average 2 years. It’s likely that this, too, is because farmers are replacing the units more quickly to take advantage of new features and technology. Much of the technology that can affect headers has to do with changes taking place in the combine itself, especially as the mounting designs evolve in newer models. This doesn’t explain why farmers keep the soybean heads for as long as they do. It’s also possible corn heads take far more abuse and must be replaced more often.
Where Buyers are Few
IRON Solutions searched its IRON Search Internet-need based used equipment listings to reveal additional information about used combines. By narrowing the equipment search to the various classes of combines that were listed on June 1, 2009, June 1, 2010 and June 1, 2011, IRON Solutions could see how long certain combines had been listed at that point.
In 2009, Class VIII combines had been listed an average of 192 days. One year ago, that number was at 181 days, and as of June 1, 2011, Class VIII combines had been for sale in Iron Search for an average of 212 days. It’s a relative measurement that doesn’t tell how long it took to sell a particular machine. Rather, the data reveals the average amount of time a combine was for sale on June 1.
Average listing durations are higher for smaller combines. These units are becoming harder to sell because farmers with small operations are merging to form larger ones. Dealers may be able to sell the big combines, but should be careful when taking Class IV and V combines on trade. On average, Class IV combines listed on IRON Search have been there 3.5 years.
Used equipment prices are also increasing in Class V through VIII combines. Four years ago, a Class V combine was selling for $65,000, while today its price is almost $140,000. Class V combines on IRON Search had been listed for 316 days as of June 1, 2011, while back in June 2009 they had been for sale for a total of 294 days. These units don’t turn over quickly.
Part of what’s driving the move to larger machines is that when farmers are buying new, they realize that there is often not much of a price difference between one size to the next, and considering the capacity and horsepower, they can often justify the next size.
When dealers take in trades, if they’ve done it correctly, they will already have a buyer lined up for an expensive one- or two-year-old machine. They already know how much they can sell it for, and therefore how much to pay for it on trade.
Because the small capacity combines are theoretically not selling very rapidly, and the newer larger capacity combines are worth more money, they are the ones selling. If a dealer is going to sell a combine, he’s more likely going to sell a unit that is newer, and higher priced.
Because of this, IRON Solutions expects to see a big drop off in the used combine market. There’s a market right now for late model combines, but how long it will last or how many combines the market can support is unclear.
For the moment, however, dealers should take care when trading for smaller, older combines. These remain hard to sell.
The information is provided by IRON SOLUTIONS, publishers of the Equipment Industry’s Official Guides based on gold standard equipment data. IRON SOLUTIONS gathers data on used machinery transactions from dealers, auctions and other sources and provides real-time equipment valuation information needed to make the best pricing decisions. For information on IRON Guides and other dealer solutions provided by IRON SOLUTIONS to price right and sell faster, visit www.ironsolutions.com.