Do Your Used Forage Equipment-Buying Homework
Machinery sales are often a reflection on the financial health of the farmers and ranchers doing the buying.
Though there remains a lot of uncertainty, optimism is slowly growing in farm country. And, the trend of strengthening used farm machinery sales since the beginning of 2018 is a sign of that improving sentiment.
Grain prices remain low, though, and while more potential machinery buyers are starting to re-enter the market, it’s happening slowly and with an abundance of caution. That’s part of why interest and demand have been stronger for used versus new machinery in the first half of 2018. But, farmers and ranchers should keep their eyes on a few other dynamics in play that could present them new and used machinery buying opportunities.
“The better you plan in this kind of environment, and the more purposeful you are when entering the machinery market, the better off you will be,” said Andy Pyron, president and CEO of Big Iron Auction Company, an online machinery auction platform. That includes growing awareness of your operation’s financial health as well as general trends in the used machinery marketplace.
Hay and forage variables
The hay and forage sector features both unique variables and those that are common in other used machinery market segments. Overall forage equipment demand is closely tied to the livestock sector and overall feed demand in a given region.
When budgets are tight, like today, equipment buyers put a premium on both price and longevity of what they buy. As a result, higher-quality late-model equipment is in highest demand, especially when it’s new enough to include at least part of the original manufacturer’s warranty. It’s a reflection of both buyers’ desire to spend less and secure equipment that will last. It also shows many producers remain in cost-containment mode and are entering the market with an eye on protecting themselves from any costly maintenance issues.
“Since less new machinery has sold in the last five years, warranties are a reason some of this one- to three-year-old equipment shows up at auction and brings higher prices. If it has warranty left, it brings more money at auction,” said Greg “Machinery Pete” Peterson, farm machinery auction expert and founder of MachineryPete.com, where he tracks auction sales data from around the country. “The size of the hay equipment is a major factor right now. Prices on bigger machinery are softer, but as you get smaller, used prices have been really solid in the first part of 2018.”
Large square balers and forage choppers are among the implements for which prices have been softer, while round balers, small square balers and hay rakes have seen stronger prices. Round balers have seen the strongest pricing on the auction market in early 2018; Peterson noted he has seen some of the highest auction prices in his database of 30 years of sales data for round balers in early spring.
Make strong, informed buying decisions
Geography is another major factor in used hay and forage equipment pricing. Part of it has to do with specific forage operations, but Mother Nature has a lot to do with it. While demand is seen as more of a macro-level variable in the grain markets, it’s much more localized in the hay and forage sector and often reflects yield variability because of weather extremes like drought. Geographic variability in used hay and forage equipment prices is a function of that localized demand focus.
“With alfalfa and haying activities being so regional in nature, it’s important to be sensitive to that and look for where demand is going to be strong because of livestock needs and how weather variables will impact demand,” Pyron said. “Hay equipment prices correlate directly with the demand for that equipment based on these variables.”
If you’re in the market for late-model used hay and forage equipment, Peterson echoes Pyron’s advice: Be informed and purposeful when looking for what you need. But, above all, be ready to “pull the trigger” if you see the right buying opportunity. Hesitation at the point of that opportunity is a frequent mistake among potential buyers, he says.
“The market moves really fast nowadays. When grain or beef prices go up, we see machinery values change almost instantaneously,” Peterson adds. “I always tell farmers to not wait until everybody wants to buy, too, because you will pay more. Buy before anybody else will. If they think that there’s reason to be optimistic for the beef or dairy market, and if it looks good for those guys putting up hay, it’s a good time to buy that baler.”
This article contains third-party observations, advice or experiences that do not necessarily reflect the opinions of Vermeer Corporation, its affiliates or its dealers. Testimonials and/or endorsements by customers in specific circumstances may not be representative of normal circumstances experienced by all customers.