Used equipment demand remains high

HAMILTON, Ill. — Greg Peterson is in his fourth decade as “Machinery Pete” — and, no, he hasn’t seen it all.

Peterson was among the panelists at a recent Media Day at Sullivan Auctioneers promoting an auction at the Farm Progress Show to benefit Farm Rescue.

Four tractors of various sizes were donated for the auction to benefit Farm Rescue, along with two gravity wagons, with those proceeds going to FFA.

During a break at the media event, “Machinery Pete” gave an update on the industry and what he’s seeing in his travels.

You have your finger on the pulse of the machinery business. Margins are tight. What are you seeing around the Midwest in the machinery industry?

Peterson: Honestly, in my 35 and a half years tracking the market, I’ve never seen a time so interesting and split as we have right now.

If you’re on the livestock side, we’re seeing record-level prices all over the place on good used loader tractors. I covered an auction outside of Bismarck, North Dakota, last month.

Great livestock sale, and the bidding strength was just incredible. It was a live in-person sale, which was fun.

So, you got that end of the business that’s just kind of roaring. But then on the grain side we’ve been in this belt-tightening period for an extended period now and that showed up really in 2024 when there was a huge drop in the value of late model equipment because dealers, coming off 2023, their level of one-, two-, three-, four-, five-year old stuff was very high — high-horse tractors, combines, sprayers, planters.

I’ve never seen them be as aggressive as they were last year taking stuff to auction, and they basically got killed what it sold for, but they had to move it because they’re paying 8% interest on all this stuff.

Did that trend continue in 2025?

Peterson: This year, dealers have not taken as much out to auction. So, the auction price into July on the late model stuff kind of plateaued.

If you’re able, it’s the best opportunity you may ever have to buy a two- to seven-year old tractor, combine, high-horse tractor, maybe a sprayer.

Again, because dealers are still trying to move that stuff, still paying interest, but the auction prices sort of quit tanking like they did last year.

Now, just in the last two weeks, the combine auction pricing may be softening up a little more, which is not unusual.

Ironically, you would think in August, combine prices should go up because harvest is coming, but in the 35 years I’ve been doing this, it’s the opposite because it’s not in the bin yet, and we need the corn and soybean prices to go up.

So, I think right now is a good time to be a buyer, basically. But, at the same time, the older stuff, if you’re talking pre-DEF — not requiring DEF fuel additive — we saw a week and a half ago a 2006 Case IH 2388 with 2,300 engine hours on it and no head sold for $120,000 in central Ohio. That was the highest auction price in 10 years on a 2388.

We’re seeing different things. It depends on what you’re talking about for used equipment.

There seems to be contrasts between implement dealerships of recent where some have a large supply of equipment on-site while others have substantially less on their lots. What’s happening?

Peterson: On the dealer side, I think it depends. I think last year, generally speaking, the thinking in the dealership business, and my dad was a third-generation dealer in Minnesota where I grew up, was when times turned down like this, you don’t want to be the last dealer to take excess inventory out to auction.

You want to be on the front end because, generally speaking, until the price of corn or beans goes up, it doesn’t jump up.

And if you think about it, all those people that bought all those combines and tractors at auction last year, they’re out as buyers now.

So, you want to get in front of them. Now, some dealers sometimes can’t maybe take the hit if you have one or two stores.

That is one of the biggest changes we’ve seen over the last five years is these dealers have got so much bigger. The last downturn we saw from mid-2013 through 2015 into 2016, if I said a dealership had five to eight stores, that was big.

Now, five to eight is really small and dealers might be 30, 40, 60 stores and it’s no less painful for them to take it out to auction and sell for what it sells for, but they’re capitalized at a different level, so they can absorb it.

That’s why last year in 2024, our data showed 150% increase in the amount of one- to three-year-old stuff sold at auction versus a decade ago in that downturn.

Back then, dealers had to sit and wait for better times. Last year, they basically said, “We’ve got to move.”

If you extrapolate this forward, farmers remember what happened in 2021 and 2022 when dealers had no inventory and we had the supply chain mess.

Now, factor what’s happened at the manufacturing level, Deere, Case and the others, they basically turned off production — closed plants, laid people off.

And if you go another year or two, it’s just a matter of time for whatever reason, when the price of corn goes up, what’s going to happen is you’re going to have a lot of farmers who have been tightening their belt for a long time, and then all of a sudden go, “Oh, yeah, we should maybe get that new tractor, combine, or planter.”

But the problem is you’re going to have everyone at the same time and then you’re going to see what was in 2021 and 2022 where the dealer has an allotment. “I only got seven,” and guess what happens to the price point? It just goes higher. So, that’s where, if you’re able right now, buy when no one else feels like buying.

If you go backwards in our auction price data at machinerypete.com and look at 2014 and 2015, if you would have bought a five-year-old tractor then, used it for 10 years and sold it, and kept decent hours on it, you’d have made money and you would have used it for 10 years.

So, it’s a theory of opposites — as I get older, don’t know if I’m any wiser, but I’m more drawn to that theory.