Farmers are entering their first harvest in three years without the additional worry of farm equipment shortages. The last few years have seen farm equipment prices increase just as an economist would have expected with the short supply. Now that the broken supply chain links have been mended, can we expect values to drop in turn? As Tractor Zoom monitors farm equipment supply and values, we are seeing a return to more ‘normal’ auction values and potential buying opportunities for your farmers. Whether you are preparing for loan renewal season, or determining values for your floor plan, this may help adjust expectations of future values.

Each equipment category is unique with supply returning at different rates into an environment with uneven demand. So to help you make more informed decisions, I’ve picked three high-value machines at different stages, each with their own story.  Let’s kickoff this series with an easy opponent.

Combines, Class 8s in particular, have been an easy target of disdain recently. (You can also skip ahead to our row crop tractor analysis and compact tractor analysis.) Even as early as last September we started to see their supply return in force. Below you can see the top graphic that charts a normalized, 30 day running average supply of these harvesters by units that Tractor Zoom is seeing per dealership location. The blue line is incoming units, green is outgoing, with yellow being the remaining supply on dealerships’ lots. 

Under the supply graphic is the corresponding average monthly values at dealerships (blue) and auctions (gray). To help control for a changing composition of more late models in the market, the lower values graphic is just for class 8 combines between 1,000 - 2,000 machine hours. 

Breaking down the supply chart shows the almost 80% increase in these harvesters as new supply (blue) significantly outpaced sales (green) for almost three straight quarters. Not surprising due to higher borrowing rates, higher prices, and lower anticipated farm income. What is also not surprising is the general downtrend of auction values over this same period. This market is heavily saturated as farmers who could possibly need a class 8 more than likely have it sitting in their shed now getting prepped for harvest. Fewer buyers and higher cost of borrowing is pulling the auction value down 16% from last August. Tightening down the data sample, coupled with low supply, results in the jagged auction value variation seen in off-months (I’m looking at you October and May!).  Dealership average list values for this hour segment are up 13% over the same period. 

You can now get down to a much more detailed level of these values within our Market Trends product. Break down dealer list and auction values by every 100 hour increments. Below are the auction values broken down by every 500 machine hours, comparing the current values in light green, to August 2022 in dark green. 

For combines up to 2,000 machine hours, last year’s auction value was at least 15% higher than it is today. The 2,000 - 3,000 hour range is the sweet spot where demand is still punching above its weight. 

This sustained value of older harvesters supports the notion that they are easier for farmers to maintain and repair, enhancing their worth. While this singular data point doesn't conclusively prove the point, personal experience reinforces it—I can vouch for it after successfully rebuilding our combine's chopper this weekend, albeit with a few scraped knuckles!

In the following parts of this analysis series, we'll delve into two categories with markedly different starting points. While larger row crop tractors are just beginning to see their inventory levels rise, compact tractors have been grappling with this uphill battle for almost a year. Irrespective of the equipment category you're monitoring, most are undergoing varying phases of this supply and demand turbulence, which directly affects their values. If you're a lender, you can equip your farmers with updated Equipment List values ahead of your fall meetings. Dealers can explore the new functionalities in Market Trends and Inventory tools to fine-tune their repricing strategies. We're eager to hear your feedback!