Small rises in prices contributed to mixed agricultural equipment values in November as supply stabilizes.
Many of the price changes in agriculture are the result of minor valuation decreases, Sandhills Global Equipment Lease and Finance Manager Jim Ryan told Equipment Finance News, adding that they followed pandemic-induced supply chain issues that contributed to a spike in equipment values.
“There’s been some rises in asking and auction values, and there tends to be a demand for the inventory, but you’re going to continue to see that values shift as inventory levels pick up,” he said. “A lot of dealers on the ag side are offering 0% financing and other deals on the new side. As you do that to try to sell your new, you’re decreasing your trade-in value.”
Trade-in values are lower than pre-pandemic levels largely due to built-up inventory, and are expected to further decline in 2024, Ryan said
“As we get into next year and you continue to see lease returns come back, plus different dealers and OEMs offering finance programs, it’s going to directly affect the used side,” he said. “It’s going to drive down trade-in values; people are going to be buying new trying to find a way to liquidate used, and the used market is going to continue to increase as far as inventory volume.”
The ag market is expected to reach a soft landing in 2024, driven by the replacement of older fleets, strong farm financial performance and tech investment, according to a William Blair research note.
Compact and utility tractor values dip
Compact and utility tractor values declined as inventory almost surpassed pre-pandemic levels following months of growth:
Retail, or asking, values for used compact and utility tractors inched down 0.4% month over month and 3.1% year over year;
Auction values fell 0.6% MoM and 5.5% YoY;
Inventory increased 2.3% MoM and 30% YoY.
“We’re getting to almost beyond where we were pre-pandemic as far as inventory levels go, and those have been part of the ag sector that’s been rising for a few months,” Sandhills’ Ryan said. “We’re past that initial demand, so the demand is there, and things are coming back to the market to where it’s taken a big hit because there’s a lot of inventory on that side.”
Farm equipment values, inventory rise slightly
Farm equipment values and inventory increased sequentially in November, although farm equipment auction values remained down annually:
Retail values inched up 0.2% MoM and 4% YoY for farm equipment;
Farm equipment auction values rose 0.7% MoM but decreased 5.8% YoY;
Inventory for farm equipment increased 1.3% MoM and 29.6% YoY.
High-horsepower tractor values split
Values for high-horsepower tractors, which are tractors over 300 horsepower, remained split in November:
Retail values for used high-horsepower tractors dipped 0.5% MoM but rose 7.5% YoY;
Auction values increased 2.2% MoM but declined 2.1% YoY;
Inventory for high-horsepower tractors rose 1% MoM and 80.7% YoY.