Strong farm profitability and ripples in the supply chain have supported a robust used equipment market in recent years. But with significant improvement in the supply of new equipment and the projected decline in net farm income for 2024, following record highs in 2022, the market is now in a state of transition.
“Uncertainty about farm profitability has affected equipment buying trends since Q4 of 2023. Talking to farmers and dealers, this is the number one reason for the reduction in sales,” says Brian Schrock, an AgDirect territory manager in Missouri.
“Row crop producers are backing off on buying equipment and values in many categories, including specialty tractors, have seen a decline,” he shares. “Customers have told me they are going to run what equipment they have to get through 2024 in hopes 2025 has a more optimistic outlook.”
In the auction arena, this era of buyer hesitancy is contradicted by examples of machines still fetching record prices. According to Kirby Fecht, an auction representative with Wheeler Auctions & Real Estate, older models with low hours continue to be in high demand.
“At a recent retirement auction, we saw a Case IH 2388 combine sell for around $54,000,” he says. “At another sale, a 24-foot Great Plains Turbo-Max vertical tillage unit went for $71,000, which was more than what the seller paid for it new.”
Dealership inventory reductions
Over the past year, the liquidation of dealer inventory has been a big contributor to the volume of late-model used equipment being sold through online auctions, or on-site at area consignment sales.
“Last year around this time we started to see aggressive pricing as higher interest rates became more of a factor, and by June we saw a lot of late-model tractors and combines hit the auction market,” says Fecht. “The same thing happened with planters in Q1 of 2024. An oversupply drove values down.”
“The supply of sprayers has also crept up, but so far values are holding,” he adds.
Now with lower commodity prices, producers who have already updated equipment will have less incentive to buy as they pull back on spending and prepare for potentially challenging times ahead.
“Some farmers will trade up for new or late-model used machinery based on the size and scale of their operation,” explains Schrock. “Financially, this makes the most sense compared to down time and repair costs, but overall, purchases will be made primarily out of necessity.”
The hay and forage machinery market, on the other hand, has been an area of strength. Both Fecht and Schrock have seen an uptick in baler and mower-conditioner purchases in areas previously impacted by drought. Sales have been supported by the cattle market nearing all-time highs.
Preparing for the months ahead
As supply and demand trends continue to adjust in the months ahead, auctions will remain an effective avenue for producers looking to acquire quality used equipment at an affordable price, especially as dealers struggle to find buyers for late-model machinery.
Online auctions in particular are making more equipment available to a larger audience, providing real-time valuations and a method to secure equipment without leaving the farm.
Fecht says hybrid auctions have also proven popular.
“At Wheeler Auctions we are firm believers in live, in-person auctions paired with internet bidding,” he shares. “This model works really well and drives results, and thanks to partnerships with local dealers and lenders, like AgDirect, we are able to create and pull off a successful event.”
AgDirect offers competitive finance and lease options for those who purchase farm equipment at auction – both in-person and online. Along with attractive rates and ag-friendly terms, pre-sale credit decisions are available so you can bid with confidence.
To learn more about auction farm equipment financing from AgDirect, contact your nearest AgDirect territory manager or the AgDirect Finance team at 888-525-9805. Check rates, quote payments and compare options at agdirect.com. Ready to finance or refinance? Apply online or use the free AgDirect Mobile app available for download from the App Store and Google Play*.
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