The used combine market saw some signs of life in late 2016, but the sales pace will likely remain on the sluggish side through 2017 as crop producers continue to weather bearish grain markets. For those who are looking to buy, however, there will likely be opportunities moving through the year, experts say.
Combine sales started their decline in 2012 and 2013 as grain prices fell. Those grain prices remain mostly in the basement, and new combine sales continue to inch at a slow pace. There have been a few signs of life on the used market recently, though their confinement to that lower-cost market segment reflects overall buyer reluctance, according to used farm machinery market expert Greg “Machinery Pete” Peterson.
“Surprisingly and consistently strong auction sale pricing was seen throughout the fourth quarter of last year on used combines,” Peterson says. “Older-model used combines were performing very well while sales of new combines have slowed as more buyers look to the used market.”
Factors driving slow sales
Charlie Glass agrees. The Farm Equipment Manufacturers Association (FEMA) Dealer Relations Committee Chairman emeritus says his latest research points to apprehension among producers in purchasing new combines for a couple of reasons, the first being overall costs.
“Combines are the most commodity price-influenced implements out there. They don’t do anything but harvest crops, and a new combine is the most expensive piece of equipment most producers have,” Glass says. “They are just not wanting to pull the trigger on an expense that big. It’s such a big investment, and when they can look at their existing combine and say ‘it’s in pretty good shape,’ it makes it easy to hold off.”
Glass says alternate ways to make incremental improvements to harvest equipment in general are also contributing to overall slow new combine sales. Producers are looking at smaller purchases, like corn heads, to maintain a modest level of overall harvest equipment improvements without taking on the cost of a new combine.
“You’ll see a lot of fields where there’s a combine with a different head on it. A lot of these specialty head manufacturers are now coming up with some very innovative products, and in many cases, they’re less expensive than OEM heads,” Glass says. “There are a lot of producers who will go out and start looking at those types of things.”
Finding middle ground on used sales
Inventory remains the major story for dealers around the country. The supply of used combines on dealership lots is high right now, but that’s likely to change as more producers re-examine their harvest equipment lineup after holding off on purchasing a combine in the last year or two.
“If a dealer has inventory sitting on his lot, especially a combine, he wants to move it as quickly as he can. That’s an opportunity for buyers and sellers,” Glass says. “The dealer wants to move that used combine, and if he can sell it with a 2% or 3% profit, that’s a good deal for him and the buyer.”
Those sales are expected to increase slightly, especially for used combines, later in the year when producers’ focus shifts away from planting and early-season field operations. From around mid-summer through early fall, sales will likely pick up a bit, Glass says. “In July through September, inventory will start coming in for fall sales, and that’s when more combines will sell,” he adds.
In general, look for the used combine market to continue to follow grain prices, with seasonal fluctuations like these pacing overall sales. Any upward movement in the markets will likely be the driver of improved sales.
“Combine sales will be slow for the next two years unless there’s a sudden rise in commodity prices,” Glass says. “By 2019, we’ll start seeing the grain markets moving back up modestly.”
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