Welcome to Moving Iron with Casey Seymour and Greg Peterson. The podcast for anyone and everyone involved and interested in the business of equipment. If you want to understand what trends and market forces are impacting the price of your iron, you've come to the right place. Buckle up. It's time to move some iron.
Hello and welcome to Moving Iron Podcast. This edition of the Moving Iron Podcast is brought to you by John Deere. You might be wondering why Greg Peterson's not here and Aaron Fintel's here, but Greg took a trip over to Scotland to do some golfing. So, can't blame the guy for that. So, I had to call out of the bullpen here. You know, bring me Fintel, and he came out of the bullpen. So, how you doing, buddy?
That's right. That's right, man. How you been?
I am good. I'm good. We've gotten a little rain on the high plains.
We have gotten a little speckle here and there.
Kind of, kind of as far as coverage, pretty damn most of it. Most of the high plains got some rain over a period of the last couple weeks and reminded us that green is a color.
And we sure need a hell of a lot more. So, yeah, I think the last...
But at least it rained. At least we know that it can again.
Yeah. It's crazy. Now here we get 15 inches of rain a year on average, give or take. And we're 16 inches behind. So that means in order for us to have a drought situation, we need 16 inches of rain just to be in a drought, not to be in a full-blown... we're going to generate a new color for your drought map out there.
They got to such a dark maroon it went black.
Yeah. They're like, uh, it's just bad out there. So, right. But then the flip side of that, you look at guys in the east. There's still people out there that I talked to. I talked to a friend of mine the other day that was kind of covering that northeast Kansas, southeast Iowa over in the Missouri area. There's guys there that still haven't even gotten in the field yet. So I mean this has been so wet and first cutting hay hasn't been done yet because it's been so wet. So it's just like two dynamics, you know. There's...
And there's been a lot of replant...
beans throughout the plains area in general.
They don't do so well when they get planted and it's dry and then they get pounded with rain. Not here further east and whatnot, but...
Quite a little action going everywhere. Seen some surprising yields in the poverty grass out of Kansas.
here and there on the socials. Surprising being 30.
Well, when you're expecting negative...
Well, yeah, when far more has been zeroed out and planted to something else than is going through a combine.
Yeah. Yeah. It was that was...
My brother lives in Medicine Lodge, Kansas. So we went down, you know, when I go see him from Scotts down there, I kind of diagonally across the state from about Goodland down to Medicine Lodge and all that kind of stuff. So, right, I got to see the wheat where the actual head of the wheat was longer than the actual stem. So, right, it was a very, very dismal thing. But, you know, go back east and you start looking at the eastern side of the state. I do a walk every year where we walk across Kansas for about 60 miles and there was some of the wheat out there didn't look too bad on the eastern side but still it wasn't like it normally looks. So, you know, it's kind of working its way through but...
Which, you know, opens the door up to, you know, you start talking about the equipment side of that.
Typical time of year where we start, you know, people are starting to make some decisions about what they're doing. But just like every other bottom that I've been through on a downturn, you start seeing this window open up where the quote-unquote, I always called it the price-effective equipment, right? So, that was the, you know, you kind of pick your range, but that $150,000 to $50,000 range equipment kind of starts falling in there and you see more and more people picking that off as you go through and that's not any different than now. So, what are you seeing as you go through your sales cycle, Aaron?
You know, kind of across the country, state of the union, if you will, there's a lot of... for what the economy is, there's pretty good action out there. I would, you know, I frequently on here say there's a hard line in the sand at three or for sure four. And we're just in an economy where that's fact, right? But starting to see more than usual reaching over that four line getting into the late model low hour stuff. You know, I'm going to say the under, well, pretty much 24s and 25s. You know, for as far as model years, those two are getting a little more traction than I expected, honestly. Tractors, combines across the board. Choppers, the hay and forage business is obviously in a drought out here. You know, we're a little slower, but here we are. We do a substantial amount of early chop out here, green chop off circles and stuff, dairies and feed lots. And that has started the chopper business rolling. Obviously, we usually, you know, we do our new swaps right about now. And usually much like planters, that's when you kind of get your pick of the litter in the roll units. And you know, you get a couple of them picked off early. That certainly helps. And we've done that.
It's just a matter of, you know, everything regardless of what segment you're talking about, everything is just a constant pivot. You know, you'll be headed this direction and then, okay, now we're over here. And not that that isn't, you know, kind of commonplace in the business, but usually you're kind of dealing with a segment, a time of year kind of thing. And honestly, for 18 months, that's been in the wind. You know, you'll be selling combines in March and planters in September and everything's just kind of whenever. But I kind of chalk that up personally to the world of last minute that we've been living in for a couple years given prices and interest rates, which fuels that. And then you couple that with not only the last minute, but what's going on on their farm with dollars and cents and all that and you sell a planter in September. Why? Because they're in the field and they know what they got and now we can act on it. You know, it's just a wild world. But the things that really surprise me right now is the reach up into the 24s and 25s that I really wasn't expecting.
Just explain that. What do you mean by that?
Well, like I've said on here a few times, there's been different times there's been different lines in the sand, if you will. You know, 300 is a chasm in the sand, not a line. And it's just locked in because for the longest time that was the upper limit for ages and ages and ages and then we hit four and then we hit five and dear god there's sixes and sevens out there now, right? But so you always got that three line and I'm going to say your A-minus to B customer, that's kind of the ceiling there. What I mean by the reach is for the longest time, well, like always happens when we hit this great big run-up, that late model used buyer jumps new and we lose him in his market segment and then that late model low hour sits there. That's what we ran into, right? Same thing we ran into in 10, 11, 12. Exact same problems. Well, that has had a wave to go through now. And I'm 99% sure that buyer is showing up to get the things he usually does. Okay. The amount of multi-unit deals across the country regardless of color, so many of that was shut down in the last year or two. Things are getting back to a centered kind of hit the big restart button and now here we go. Last year was kind of the start of normal coming back in a way and this year you're seeing more of that as we move forward. Does that make a little more sense?
Oh yeah, it makes a lot more sense. Makes a lot more sense in the fact that you're seeing some movement away from just a certain band of equipment, right? Like you're seeing some broadening of buying habits and those kind of things. No one's setting the world on fire by any means, but it's very much a... it's not... because for the longest time, you look at auction results, you look at auction activity, you look at dealership guys you talk with and those kind of things. And I think a couple things might be playing into this. But I mean, you know, rewind six, eight, nine months ago and if it was five to twelve years old, everybody and their dog was looking for something. Like I mean, there was stuff flying off the shelf and the dollars associated with that were very strong, right? I think a lot of that stuff that we see now, some of the movement that we're seeing inside of that might be attributed to some of the fact that a lot of that stuff's gone now, right? I mean, you look at what... So, Greg and I talked about this last week a little bit, but you know, I've watched this happen three or four or five times over my career now where you get to a certain point in the cycle and things kind of get hollowed out, right? So, what was once this is the premium cherry piece of equipment, you know, the hour range, the condition wise, everything. And I kind of gave a guy an example the other day. It's like, you know, you go to a used car lot and you're sitting out the front, there's five cars sitting out front and they're immaculate, beautiful, right? Shiny paint, nice tires. Inside of them are great. There's no blemishes. They got low miles on them. Interiors are great. There's no looks, looks brand new, right?
Well, something like that. And you know, those five get sold off, right? And let's just say all of them brought, you know, $25,000 or whatever, right? Well, the line behind them are the next levels up. Miles a little bit higher. Tires aren't bad, but they're not quite as good as they were on the first ones. Maybe a nick or two here, door ding here and there. Those kind of things. She gets shiny paint, but just, you know, just a little bit rougher than what the ones were, right? A little character. Well, now your choice is I can buy these next level machines for... because it doesn't matter anymore what the previous one sold for because they're not available anymore, right? I mean, they sold for $25,000 and they were mint condition machines, right? The next level up as you go to that next line, I'm not saying they're going to sell for $25,000, but they're not going to sell for $18,000 anymore either, right? It's that next level up type of thing where you're like, this is now your choice. This is what would be considered premium, right? And you kind of, they kind of move down to, you know, instead of $25,000, maybe they bring $22,000, right? And those kind of things. So that gets ratcheted up over and over time. And then now the $25,000 car shows up now it brings 30, right? Because it's that much better than what's available, right? Some of that stuff we were kind of seeing happening now. A lot of that stuff got chewed up, right? It's not there anymore. So to your point of why do you see some people moving up into different levels of equipment that haven't been that active? It's kind of because that's what's available right in a lot of ways.
Oh yeah. Yeah. I mean like they didn't want to spend 300,000 but they were going to spend 200,000 right or 250 or whatever the number might be.
So now they like, well we need to do X so here's what we're doing. Some of the last minute stuff too that you've been talking about as well is I've been holding out for this specific machine and when that specific machine shows up, I'm now going to move on it. And I don't care if it's the middle of planting season or the middle of harvest, I'm ready to make that move now. And I think that's some of that stuff is some of that stuff is other things too, is you know, it's financial stuff and the banker dragging their feet and those kind of things getting those things moving on. But there's a big hole in used inventory right now that's been hollowed out. That is, you know, you can go there's a little bit left in there but it's not the premium cherry stuff that we've seen in the past. Right. So now, do I want to spend $50,000 here or maybe can I go spend 75,000 or 100,000 and kind of get something that's maybe a little different than what I've been looking for? I kind of feel like that's some of that stuff that's going on, you know?
The other thing if I was to peg something as hot, and I laugh for a reason, but if there's anything that's hot right now, it's the 8R with hours, right? The 35. Everybody and their dog wants an 8R, which this is what we constantly talk about, right? There are so many guys that go get the new and run them to three, five, whatever. Then there's another group of guys that usually get those and run them to 15. Then once you get to 15, Katy bar the door, everybody shows up and wants that damn tractor. The 8R, and by that I mean literally the 8R 340, 8R 370, the current new style, those things, and I'm going to say just a little over 15 because I think at 1500 hours, you're just not quite there on price point. But you get them things to like 1,800 to 2500, maybe even up close to three, fly out of here.
Because there's a guy with a, just like we constantly talk about on here, the guy with the 5 to 10...
or the 10 to 15 or the 10 to 20. All three of those guys want that tractor.
Well, I think a couple things too that have kind of shaped that a little bit. So, let's go back and think about how the hours on machines have grown to what they are today, right? So, think about this. Go back to 2020. You order a new tractor. It gets delayed, right? So, now you got to run this machine an extra season of use, right? The owner goes back in, it gets delayed again. So, now you got another half a season of use on it. So, now what you're talking about what you normally would see, now you're talking about, let's just say, I'm not throwing numbers there. Say you put 500 hours a year on a tractor or whatever. You got 500 hours when you normally would have traded. Now you got another 500. So now you got 1,000. So now when that machine actually comes in on trade, it's 1,250 hours, right? Then that was a very common experience, right? Well, now let's think about this. Now the economy kind of drops off a little bit. I normally trade my machine off every three years. My used machine every three years when I trade it, right? I put 1,500 hours a year on it or whatever the number is, right? So I should be getting that 2,000 hour machine when I trade it back in. Well, the economics aren't working out for me, so I'm going to go ahead and keep it another couple of years. So, when I'm trading that machine in now, it's sitting at 3,500 hours, 3,000 hours, something like that. That changed the landscape of hours on the machines. Like it used to be the normal range as far as age of machine goes. It went from being... it exploded. Like it just really exploded out. So to your point, you know, you start looking at, hey, I want to buy a 4,000 hour machine, a 5,000 hour machine, a 3,500 hour machine, whatever the number is, because I'm trading in my 6,000, 7,000, 8,000 hour machine. I'm knocking it down 5,000 hours by going backwards to that. I'm not saying that's uncommon, like that didn't happen in the past, but that range of which people traded in and the hours were, it has grown so much that now what is acceptable hours on a quote-unquote mid-level, I always call it a mid-career tractor, right? Where it used to be 2015 when I first started, 1,500 hours on a five-year-old machine was like, oh wow man, he's got some hours on it. Now it's like, it's only got 1,500 hours on it. I mean, you know, it's like that dynamic has changed of what's acceptable hours for a year-model machine has been greatly widened.
Well, the other factor that goes into that too, Casey, that isn't... I mean, it's related to the machinery business, but not directly. There used to be five of those tractors, right?
