Agriculture equipment inventories picked up in September,a time when seasonality typically drives supply down.
Agriculture equipment inventories and values resisted seasonal trends amid elevated interest rates, Jim Ryan, equipment lease and finance manager at Sandhills Global, told Equipment Finance News.
“This time of year, inventory levels for combines are down and high-horsepower tractors are down, but it’s different this year,” he said. “Those inventory levels are up. As inventory levels for all categories keep rising, auction values are trending downward.”
Lease returns and manufacturers catching up with inventories following the pandemic are driving up agricultural inventories and shifting equipment values, Ryan said.
“There’s just a lot of shifting and shaking of what’s normal in September and end of the year,” he said. “Inventory level is different this year, as there’s a lot more readily available inventory than there typically is” in the market.
The abnormal September trends are likely to impact agriculture activity through the rest of the year, Ryan said.
High-horsepower tractor inventory spikes
Retail, or asking values, for used, high-horsepower tractorsrose 1.3% month over month and 11.2% year over year in September, according to Sandhills Global auction market data.
Auction values also rose 0.7% MoM and 0.3% YoY.
Inventory for high-horsepower tractors rose 6.4% MoM and 84.9% YoY.
Compact, utility tractor values dip 1% MoM
Retail values dropped 1% MoM and 2.3% YoY in September, according to Sandhills.
Auction values slid 1% MoM and 5.6% YoY.
Inventory for compact and utility tractors rose 1.2% MoM and 32.8% YoY.
Farm equipment values mixed MoM
Retail values inched up 0.4% MoM and 8.9% YoY in September, according to Sandhills.
Auction values declined 1.1% MoM and YoY, the first annual decline since 2018.
Inventory for farm equipment rose 3.1% MoM and 36.2% YoY.
Ag industry outlook mixed
Demand for forestry equipment, along with mining and construction equipment, remains at about the same level on the dealer side compared with pre-pandemic levels. However, an increase in jobs requiring forestry equipment is increasing demand, while mining is also likely to increase, John Boy, finance and sales administration manager at equipment dealer Anderson Equipment Co., told EFN.
“The mining and forestry side will see a little uptick in demand for a lot of those machines,” Boy said.
With planting season still ahead for farmers, normal seasonality could return in early spring, Sandhills’ Ryan said.
Farm producers are less optimistic, according to the Ag Economy Barometer published by Purdue University and the CME Group. Farmer producer sentiment declined in September, landing at an index value of 106, down 9 basis points (bps) MoM and 6 bps YoY. Higher input costs, rising interest rates and declining livestock and commodity prices represent the three largest concerns for farm producers, clocking in at 32%, 25% and 22%, respectively, according to Purdue University survey.