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.
Hey, welcome back to the Moving Iron Podcast. Clinton Griffiths in with the OG Casey Seymour here talking about what's going on in the equipment industry as we try to sort out. You know what it is though, Casey? It's vest season and I know you like a good vest. I mean, we've hit October. It's official.
Yeah. Yeah. We finally got the humidity out of the air and it feels like fall outside again.
Yeah, that's right. So, let's get into it. I know last week we had Moving Iron Summit. Obviously, a great event. Lots of good conversations. Now that you've had a few days to process there, give me your takeaways from this year's event.
I think a lot of optimism is probably what I would say. You know, I think people are looking around. I mean, this whole year's kind of been a tale of two tastes here. I mean, you have if I really think if you know, right now, you know, I work for a John Deere dealership. So, if we're going through combine EOP right now. I think if combine EOP would have opened when planters and sprayers opened up back in June, we'd have a totally different conversation about where we think the combine market's going. So, I think right now that this it was a very abrupt run up in price, you know, it wasn't like your typical chipping away, chipping away, chipping away. We just kind of went, you know, just kind of took off and ran. Now, we're kind of floating around in a space now. But the optimism that I hear people talk about was good. A lot of guys talk like they're buying used equipment, you know, they're back they're out hunting for it. And I'm looking at what's going on here and looking down the road saying like we're going to have to be doing the same thing eventually, you know. So not quite there yet, but we're going to be there before we know it.
Yeah, absolutely. Well, and it is, you know, kind of a busy season, obviously harvest underway. We've had some wet weather. There's some parts of the country that are kind of on pause, slowed down just a little bit, waiting on these crops to dry out a little bit before we get rolling again. From that perspective, obviously we spend a lot of time in machinery. And there's a lot of work that gets done to keep that machinery on the road and running. How are you hearing from your part of the country in terms of how harvest is going and what service looks like out there?
We're, you know, we're in the Midwest here. It kind of feels like we're kind of in the middle of where things are just about perfect. You know what I mean? Like we've got there's some areas that are a little wet and those kind of things. But nothing like you hear like in eastern Nebraska for example where they got a great crop they just can't get it out of the field like they had started yet, you know, and you hear about some other stuff further east of us and you're hearing about the same kind of thing out of them. So for the most part where as far as harvest conditions go where I'm at, it's great. Out western Nebraska, you know, they had a rough start to the planting season and it's really not gotten any better. So, I mean, it's just one of those things where they're catching some rains now and those kind of things, but it's not hindering any harvest action. So, I think this will be one of those things that we start hearing a lot more about as these crop conditions and those kind of things start rolling through because there's a lot of people have big crops just can't get them right now. And it's pretty interesting to watch how that's going to play off.
Yeah, we're seeing some reports of some in-field sprouting both on corn and soybeans. And that's a lot of moisture to get to that point at this stage in the game. It takes a lot of moisture in the fall to get that done. So obviously grain quality is going to be a big part of the conversation. I think the biggest conversation we're hearing right now, Casey, is this diesel price. It continues to, I mean it's just sticky. It has been stuck at these really high levels and boy I know some of the states are trying to, you know, do different things, you know, getting rid of some taxes or maybe allowing off-road into on-road and different ideas and options out there but it is a concern. This is a busy season.
Yeah. Yeah. It's a concern across the board. I mean I've heard a lot of guys talk about that, you know, and it's what the bigger concern to me that I'm more worried about is how does this affect the trucking side of the equipment space, right? So, sure, you got all these machines that be coming out of the factory and you're going to be paying like I talked to trucking companies where your fuel surcharge is about as much as the freight to drive it down the road. I mean, so it's just like it's just getting it's doubled and tripled the price of freight, you know, and that's a big thing. So, and then, you know, that puts guys at a standstill because, you know, just like anything else, there's only so much you can afford and they're going to have to, you know, receivables and those kind of things are going to make some of these guys where they can't go, you know. So, what's that start to look like as we head into this last quarter of the year? And even gasoline prices, I mean, they were kind of holding out on price and now they're up, you know, I got gas the other day. It was over $4, you know, so it was, you know, things like that. I mean, there's just I kind of worry about that. And then what's that do for the consumer, you know, they start looking at how they're going to, you know, the beef situation and they going to start, you know, do I get the ribeyes or do I go down do I get chicken breast now? Right? I mean, that's those kind of conversations are going to start coming up. So, I look at this from the perspective of where do I think the market's headed, what things are, how's this going to affect used equipment, and I think right now we're in a good spot. I don't think it's going to be We got plenty of activity. We got plenty of people looking at stuff. The diesel part of that hasn't really, you know, thrown a wet blanket on anything yet, but it has you hear about it. Yeah.
So, I drove by guys when I was getting gas the other day. It was $6.89 a gallon for diesel. Like I mean I've never seen it that before. That's just crazy, you know?
Yeah. And it's crazy to go from, you know, whatever 350, 3 and a quarter all the way to almost seven. I mean that is just a massive jump. You know, one of the things I think about is, you know, as we do more of these online auctions and we buy equipment from other parts of the country, you know, we'll move that stuff to wherever you need it. Let's say you buy it in the southeast. You want to use it in Nebraska or whatever. But now you're going to throw a probably a transportation surcharge on there. That's going to add to that price, right? I mean, at some point you have to start thinking about should I buy something closer?
Yeah. Yeah. We were looking at some freight bills the other day and I had to look at it two or three times to make sure I was doing it right because it was I mean it was what typically was about a $45,000 freight bill was $7,500 to $8,000, you know. I mean that now you start looking at that situation and what how do I how do I combat that and how much stuff do I really need to move? You know what I mean? And that's those are the kind of things like you looking at inventory at your store. Like I got to make sure I get the right inventory the right place, but at what cost is that worth it? You know what I mean? Like those are the kind of things that you start thinking about when you start looking at freight and what that means because you can, you know, you have 100 pieces of equipment and each one of those cost you two to 5,000, 2,000 to $5,000 a piece. You rack up a pretty good freight bill pretty quick, you know, and those are doesn't take long to do that. So that's absolutely something that we're paying close attention to.
Yeah, obviously we've been talking about it here the last few weeks of, you know, a little bit of optimism there with this better grain price that we're seeing. Of course we did have a USDA grain stocks report that added a little bit to the corn side of the ledger and we'll be getting another kind of WASDE supply demand report here first week of October. But as we start to factor all of those things in and we start looking out between now and the end of the year, give me some things that hot on your list, things that you'll be watching, you know, that from an auction or even like an inventory sales side of things that you're going to be looking for in the next few weeks.
Yep. Supply, supply, supply, right? That's what I'm paying close attention to. And quality, right? Those are the two things. So, you know, Greg talks about it all the time, but if you look at with the stuff that's been selling lately and the stuff that's been bringing big dollars, it's, you know, that's super high quality equipment, right? I feel like we've kind of shoveled the cream off the top here. We're kind of back into this what I would consider to be more of an average level of equipment. The thing about that is that it's the next man up mentality, right? So this is what grade A looked like and what's not there anymore. So this is now grade A equipment, right? So the quality doesn't necessarily get better, but the price doesn't come down with it, right? It just stays there, right? And when that next extraordinary piece shows up, it sets a whole new level up top. So supply things close attention to the amount of guys that are talking about looking at one and two year old equipment that's a new conversation that I've heard a lot of people talk about really and when they're out there. So that's more on people's minds when they're looking for stuff now. So, the combine inventory is one thing I would pay close attention to as well, just because it's been a while since some folks have done some stuff in combines, and you know, combines are one of those things where you can't really afford to fall behind on maintenance, right? Cuz that jumps up on you quick. There's a lot of moving parts there. A lot of they eat parts for breakfast there every day in that combine. So, that's, you know, you got to pay close attention to that. So, kind of making sure that stuff gets renewed. A lot of combine activity that I wouldn't have necessarily anticipated over the last as we look here to the last quarter of the year. So that tractors is another thing too. I mean we're seeing some real crop stuff move through there. Little more movement on the loader tractor situation. That's always been the big head scratcher of the year, right? That's the kind of stuff you see cattle guys have and they've had the capital to make some adjustments in their equipment space and they haven't done that, right? They just kept buying really really expensive cows and you know selling them over and over again. So that's a scenario that we paid close attention to. You're starting to see some movement on the loader tractor side of it there. But the real crop stuff, four-wheel drives, those kind of things, they're starting to see some movement there. Four-wheel drives especially articulated four-wheel drive, they've been kind of a dog here of late. By the last eight, six, eight months for sure. And you're starting to see some movement in that stuff, too. So, I think people are starting to realize that, hey, you know, my dealer doesn't have the massive lot of equipment that they had. It's still, but there's still a lot there, don't get me wrong, but it isn't they're not making windrows anymore, windbreaks on the lot anymore. They've got some space where you can actually go around. So, you're seeing some of that inventory come down, and that's going to be something that's going to start driving price as we start looking at there. And like I and I have talked about this since first year. There's no cheaper time to buy it than right now because it's just going to continue to get more expensive as we go through the as supply starts to shrink even further.
Casey, you talked a little bit about four-wheel drive sales and those being a little bit slow. What's behind those being slow, do you think? Is it just because of where we've been in the farm economy that we just haven't seen as much of interest there?
But I think that's some of it. You know, I've always had this theory that I follow. When sprayers are doing well, four-wheel drives aren't. And when four-wheel drives are doing well, sprayers aren't. And I it's, you know, bro science, right? I have a PhD in bro science. So, you know, but it's one of those things where I watch how those things move and it has I think it has something to do it correlates with no-till, right? So, there's certain time when they have to come back in and finally, you know, rip some stuff up or, you know, whatever it is, kind of turn the soil a little bit to kind of get some of that stuff moving. And every about five to three to five years, you see this movement in those things. And right now, you know, sprayers, not that they're on fire by any stretch of anyone's imagination, but they're doing better than four-wheel drives, right? And it's starting to see some of that turn. So, I think it has something to do with that, but mostly it's a big they're a big animal, right? And they're expensive and we haven't had necessarily the economy to support some of the stuff. So, you start looking at where those play into the farming operation. They're not all they don't quote unquote require as much maintenance as some of the more expensive stuff on the harvesting and planting side of it. So, I just feel like they've been pushed to the back burner on that stuff. And as you look at some of these 600, $700,000 used machines that are out there, you know, what do I really need to spend my money on? And it's probably not a four-wheel drive right now. So, I think that's where some coming through.
Yeah. Picking your brain there on your PhD in bro science. What's your read as we get toward the end of this year? We do have a little bit better price. Obviously, the input side of things has been expensive, so it hasn't been like super great margins, but maybe we've seen a little bit of a gain here that we might make some money. What do you think about do you think we'll see more retirements and people like taking the upside here and getting out or what's your read on that?
Yeah, you know, you always have when I've since I've been doing this, you always have this into I've got one more uptick in me, you know, and I don't I'm not I'm going to regain my equity and then I'm going to be done. I don't I don't want to go through this again. I hear a lot of guys talk like that. I think so, man. I really do. I think you're going to see a lot of a lot of guy, you know, farming is not it's not as much of an occupation as it is a lifestyle, right? I mean that's I mean that's where you know it's people grew up in that land and they've have an attachment to it. So you know some guys will do it forever right you know a good been good friend of mine that I've known for a while he was a 92 year old guy that sold case equipment in Scottsbluff, Nebraska and still did it like till the day he died. He was then he just passed away about a week ago. So, but he just loved it to death, you know, and didn't want to do it. But I think there's a point in time when you look at how much more of this do I have in me and who's coming back to the farm, there's less and less people coming back and these operations are going to start saying, you know what, I'm going to rent my ground and live in my house and enjoy life and you know, do that. And you see a lot of that when you start seeing the next uptick come through. And as we do this, I would suspect over the next, you know, 18 to 36 months, you know, worth of time, you're going to see a lot of that take place. And there going to be a huge exit. And you know as well as I do, the average age of the American farmer just keeps getting older, right? And that is the so there's going to be a big exodus in there somewhere, right? And that's going to change a lot of the landscape, you know?
Well, and that's I mean from this perspective of a machinery standpoint, I mean, it's really about does this change the inventory availability, the conversation, you know, if you're saying, "Okay, I'm going to stop here and get a good price for your machinery. They can go to somebody that needs it. You rent your ground out." I mean, these are things that we hear people talk about and they, you know, it happens. Not that anybody's advocating for people to get out of the business. We just know the realities of it. And yeah, you know, the age that you know, at some point people age out and they if there's nobody there to come back and do it, then it something else happens. You know, it's still going to get farmed, but in a different way. So, yep. Yeah, it goes back to that point you made there a little bit. When you look at the only way you use equipment, you got to sell new equipment, right? And there's going to be less and less new equipment that gets sold. So that means there's going to be less and less available used equipment to buy. Not it's not ever going to go to zero. So don't someone's listening to this and case I can look out my window here and see a billion dollars worth of machinery sitting there. I know you're crazy, right? But at some point in time there's that equilibrium that happens, you know, and you're going to see a shift.
And so you're going to start seeing longer usages of machines before they're trading inside. So you're going to see more, you know, average hours. Cuz I've noticed this steel machine like the average season of use of ours is starting to creep up, right? And because there's just less machines being used on the farm. So, you know, a lot of conversations around we have six tractors and my, you know, mom and dad and grandma and grandpa did this with four. Do I really need six tractors anymore? You know, like those kind of conversations that you're hearing people talk about. So less new equipment is going to generate less used equipment which is going to generate a higher floor in used equipment which is going to give you which is a positive thing right you're going to you have the high highs and the low lows are going to be kind of normalized out to where there's not going to be this big swing in equipment that we've seen over the past years where we've oversold you know new into the used and have this big you know one and two year old stuff. So, as I'm looking at this, that's why I kept talking about supply earlier is like, you know, there's not a lot of these gaps that we're seeing right now is because of a lack of new sales, right? Yeah. Over the last three years and right, you know, so there's just less used equipment out there to be had and which, you know, was a good thing. You know, I'm not saying it's bad, but it's just it swings. The pendulum is starting to swing and it's getting to be very erratic swing when it goes. So,
Yeah. Well, it's it's the realities of the market that we're in right now and the world that we're living in. Give me a final thought here, Casey, as we kind of kick it toward a break and your thoughts this week from the cheap seats there.
Yeah. So, I think just, you know, pick stitch. If you're ready to buy something and you found what you're looking for, don't hesitate. Don't wait. Move forward with it cuz it's going to be you're absolutely going to have some competition before too long moving into that. So pay close to that. Pay close attention to the supply that's around you. And lastly, you know, it's harvest time. So everybody just be safe out there. You know, this is don't get in a hurry. Take your time. You know, what's my what's that saying? Slow is smooth and smooth is fast, you know. So that's if you figure that out, you're going to be all right.
Yeah, absolutely. Well, Casey, appreciate it. Thanks for the insights as always and joining us. We're going to take a break, but we'll be back with more moving iron here in just a minute.
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Booyah. Welcome back to Moving Iron. Machinery Pete joining us here today. And Greg, good to catch up with you. I know you were at the Moving Iron Summit last week. What were your takeaways from the event and their visiting with folks?
Yeah, moving iron was great as always. Fun to get down and talk to all the dealers down there from around the country. A lot of auction auctioneer folks down there too. And other related businesses. I think the takeaway is to me is just how dramatically the landscape has shifted in the used equipment world based around inventory levels. You know there certainly are some dealers there that are have some problem areas with too much late model equipment for the most part when you look at on aggregate it is shocking where we were two years ago and where we are now. So I again heard a number of dealers verbalize a phrase I frankly never thought I would be hearing anywhere around now. And that was we actually we wish we had more good used equipment. So for two reasons. One is you know they're low and they also know that that's what farmers are focused on right now and still to this point you know the fire hasn't been lit with new equipment sales. So for some dealers it's problematic to have not enough use for them.
Yeah absolutely. And you've been to a couple of different auctions. Talk to us about them.
