Learning Center

Agriculture is constantly evolving, which is why AgDirect works to help you make the right decision for your operation when it comes to financing ag equipment.

Filter by Topic

Used Tractor Market

Used tractor market is strengthening

Published on 2/6/2017

The used tractor market saw signs of life in the last two months of 2016 that have been otherwise largely absent since grain prices fell and started altering many farmers’ overall machinery buying habits. But, that breath of life hasn’t touched all sectors of tractor sales, and the bright spots have a few caveats, experts say.

A closer inspection of the used tractor market shows the recent bump in sales comes as an actual consequence of the continued crop price downturn; as farmers tighten their belts, new machinery spending has fallen lower, with the used market offering a lower-cost alternative, says farm machinery auction analyst Greg “Machinery Pete” Peterson. Despite corn prices lower than half of what they were just a few years ago, farmers still have iron needs to cover, and they’re looking at low-cost ways to do so.

“The time windows to plant and harvest just continue to tighten; farmers cannot afford down time. These truths work toward continued demand for the equipment they need, and if not realized on the new equipment side, then the trend is more evident in the used equipment market,” Peterson says. “Such is the case here as of late.”

Two-wheel-drive tractors in demand

December 2016 saw a 5.5% increase in total tractor sales — new and used — compared to the same month in 2015. But a deeper look into that figure shows two-wheel-drive tractors accounted for the vast majority of the increase. Just over 18% more two-wheel-drive machines under 40 horsepower sold in the U.S. compared to December 2015, according to a report from the Association of Equipment Manufacturers (AEM). On the other end of the spectrum, sales of 100-horsepower and larger two-wheel-drive machines saw a year-over-year decline of more than 19%. Four-wheel-drive tractors saw a decline of more than 41% in December 2016 compared to the same month the previous year.

AEMTractorCombine_report

The gradual improvement in used two-wheel-drive tractors is expected to continue, with smaller mechanical four-wheel-drive tractors seeing a slight uptick in sales on the used market moving through the first few months of 2017, says BigIron.com president and CEO Andy Pyron. Continued expected strength in two-wheel-drive tractor sales is a reflection of producers covering needs for their highest-priority machines.

“Two-wheel-drive sales are absolutely steady and continue to maintain what we refer to as their utilitarian position,” he says. “Supply and demand are going to be the driving factors behind buying behavior, seller behavior, and the related prices that ensue.”

A growing emphasis on ‘good’ used tractors

Peterson and Pyron agree the strengthening used tractor market, at least for “good” two-wheel-drive and mechanical four-wheel-drive machines, is expected to continue to see steady, conservative strength through early 2017.

The quality of the machines that will continue selling in the used market will be a major variable. As farmers remain cautious with spending, largely covering essential needs in purchases, tractors in better condition will continue to see sales trend slightly higher. In other words, the better machinery is cared for, the better its chances are of spending less time for sale on the used market.

“There’s a lot of inventory out there, and poor maintenance is reflected in final sale prices,” Pyron says. “For the individuals who have adhered to good maintenance programs and maintained their iron, I think they are reasonably rewarded for their hard work, effort and diligence over the lifetime of their tractors.”

Confidence is key

Part of the late-2016 perk-up in used tractor sales stemmed from confidence among buyers. Factors like national election results that were construed as more “business-friendly” and strong corn and soybean yields in much of the nation bolstered farmers’ confidence heading into the winter, Peterson says.

“In November, I traveled extensively throughout the country. You could feel a more optimistic attitude in farm country after the election. If there were such a thing as a ‘Farmer Attitude Index,’ it would have exploded higher the middle two weeks of November,” he says. “The more upbeat attitude was coinciding with these rising auction sale prices I was seeing all over on good condition used farm equipment, despite the challenging ag economy.”

Maintaining that confidence will be key to sustaining that confidence, Pyron adds. That may come from any pricing incentives dealers and other sellers can offer farmer buyers.

“It’s all about buyer confidence. Farmers step up when they have an assurance,” he says. “Most of that buying interest will be with low-hour, well-maintained machines, especially if they’re offered pricing and support programs.”

Farmers can be confident in AgDirect as a financial partner for machinery purchases. We’re dedicated to agriculture and offer myriad financing options to fit any operation, whether buying used or new machinery. We offer financing for buying, leasing or refinancing, with fixed- and variable-rate terms from two to seven years. We also offer delayed payment plans with no prepayment penalties.

Want to learn more? Contact your nearest AgDirect representative!

Learning Center

Agriculture is constantly evolving, which is why AgDirect works to help you make the right decision for your operation when it comes to financing ag equipment.

  • Chad and Amy Haeg

    “AgDirect is simple and flexible.”
    – Chad and Amy Haeg , Small Grain, Lentil and Bluegrass Growers

    See more

    Watch video

  • Cliff Shudak

    “Their people understand the purchases, and they’re very good to work with.”
    – Cliff Shudak , Grain and Beef producer

    See more

    Watch video

  • Dave Zimmerman

    “I’ve never received such speed and ease of financing.”
    – Dave Zimmerman , Grain and Beef Producer, Custom Seed Corn Harvester and Custom Sprayer

    See more

    Watch video

  • Gerry Wiese

    “Bottom line, AgDirect is a business decision.”
    – Gerry Wiese , Grain and Pork Producer

    See more

    Watch video

  • Jacky Pace

    “It comes down to people.”
    – Jacky Pace , Seed Corn and Grain Grower

    See more

    Watch video

  • Jennifer Gottschalk

    “Having good financial people behind you like AgDirect and Farm Credit is just smart.”
    – Jennifer Gottschalk , Seed Corn and Grain Grower

    See more

    Watch video

  • Jeremy Heine

    “It’s just plain easy working with AgDirect.”
    – Jeremy Heine , Grain and Beef Producer

    See more

    Watch video

  • Jess Blatchford

    “AgDirect puts money back in my pocket.”
    – Jess Blatchford , Potato and Wheat Grower

    See more

    Watch video

  • Joe Klemen, Dwayne Klemen and Mark Klemen

    “AgDirect takes care of us.”
    – Joe Klemen, Dwayne Klemen and Mark Klemen , Beef, Crop and Dairy Producers

    See more

    Watch video

  • Randy Emtman

    “I like that AgDirect is linked to Farm Credit.”
    – Randy Emtman , Timothy Hay, Grain, Legume and Beef Producer

    See more

    Watch video

  • Steve and Cindy Newsom

    “It’s critical to have a lender that is open minded to taking on new enterprises.”
    – Steve and Cindy Newsom , Cotton, Peanuts, Alfalfa Hay, Grain and Wine Grape Grower, Vineyard Equipment Dealer

    See more

    Watch video