Welcome to Moving Iron with Casey Seymour and Greg Peterson, the podcast for anyone and everyone involved and interested in the business of ag 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 Moving Iron podcast is brought to you by John Deere. We've got Greg Peterson from Machinery Pete to talk about what's happening in the market. Greg, how are you doing today?
I'm doing well, Casey. How are you doing?
Doing good, man. Doing real good. It's a... Say what? We waited a long time to get some rain and we finally, last couple weeks here, we've gotten some decent... Now, I mean, you know, it's funny, you know, you increase your sales by 20% and then you go from, you know, selling 10 to selling 12, you've done that, right? So this is kind of... the rain that we're having right now is, you know, we're up 100% because it rained, you know, a quarter of an inch. So there you go.
Well, the same in Minnesota here this last week. We had wildfires across northern Minnesota and we got some good rain Sunday night into Monday. So I think it helped a little.
Yeah, yeah, it's been... Actually, we got a frost warning going on. We've got some potential to see some freezing temperatures here over, I think, tonight and tomorrow night. So, and into tomorrow, so it'll be interesting to watch this.
Tough time of year, isn't it?
I'll tell you what. I'll tell you what. Just because it's May doesn't mean winter's over. You know what I mean? Don't get too cocky. You got to watch yourself. You got to watch yourself. All right, man. There is... you brought some pretty good points up as we were talking about what we're going to talk about on this podcast, and you talked about the number of auctions that were up and then the machines associated with those auctions and what that looked like. So talk a little bit about what your findings are.
Yeah, I've just recently, Casey, been... you know, such a unique market right now. I've been saying on our past episodes, and other stuff I do for Farm Journal or YouTube or TV show or whatever, I just haven't seen it like this before where values on at least good condition used are holding, strengthening a little bit. Not saying all used is up. I mean, it's got to be what people want, but that stuff has been pretty strong. And at the same time, every time I've seen that over the past three and a half decades, that has always, previous to this, correlated to good conditions for new equipment sales, but this is the first time they've become disconnected. So that all points I got digging around. It's been a very busy spring. And so I looked at the raw number of equipment auctions, which we have a method of kind of compiling that on the backside of our machinerypete.com website because I've been tracking this stuff for so long, working with over 1,500 auction companies. What I found through May 7th, Casey, was pretty eye-opening. The number of equipment auctions our data is showing has increased 19.5% versus last year. And that data point in and of itself, not super surprising. I mean, it's been challenging long enough that on the top end, we're seeing more farmer retirement sales from folks who are maybe, you know, whatever, upper 60s to in their 90s or late 80s, just deciding maybe to stop the equity drain. So that makes sense. And then we've definitely seen more auction events, sort of partial auction events. You can wordsmith them a million different ways, but basically, farmer equipment reductions. They're not retiring, but they're just paring down the equipment line, probably lender driven, of course. So, and then I think the third piece is there's so many regional online auction companies popping up that are gaining footholds. And it swelled it all together, and so again, it's almost a 20% jump in the raw number of auctions. Now, conversely, I also hopped in and was poking around. You and I have been talking a lot about, you know, the cause and effect here of very slow new equipment sales for a number of years. And what our data shows is 1 to 3-year-old equipment units, 19.9% fewer sold at auction through May 7th than last year. And if we break that down into some specifics, you could look at tractors down 23%. That's all kinds of tractors, big, small, but 1 to 3-year-old down 23% versus last year. Harvest equipment, so not just combines, but heads, down 13.7%. If you want to get more specific on small tractors under 40 horses, down 34.5% versus last year. Planting equipment, seeding equipment is down 25% and tillage is down 28.6%. Despite the fact we have 19.5% more auction events, but the events are featuring less 1 to 3-year-old stuff. So to me, they can seem wildly opposite, but they make perfect sense based on what we've been seeing out there. And again, I think the thing with the 1 to 3-year-old stuff, we have to go back 2 years ago to '24, about the spring is when it started really kicking in. Dealers across US and Canada collectively trying to get ahead of it, and really cranked a lot of equipment out to auction, a lot of late-model equipment out to auction, because they're paying 8% interest. And now, 2 years later, we're getting this again. I just haven't seen this. So these two data points are really, really interesting. And now, with the war and the price of fuel and fertilizer, and we've talked, people know I don't like making predictions, but if this lingers much longer, these conditions, you would guess that it may foster even more auction events on both ends. On the upper side, older fellows, guys, folks deciding, 'Well, okay, 2026, 2027, maybe we'll hang it up.' And unfortunately, on the bottom end of that K-shaped economy, you've got that increasing pressure, so you might have more of those type of auction events. So those are some of the things that I've been chewing on.
Yeah, I'll tell you, brother, that's some good points there. So when you take a look at a couple things. One is the dynamics in the marketplace right now, and what's going to drive the sale of equipment, right? And the short answer is not much, right? There's just the dollars and cents that are associated with that are in a bad spot, right? So we're trying to figure a way through that. You take a look at like where I'm at out here, where you've got the amount of water that's going to come out of the mountains for irrigation is just not there this year. So that's going to be... you have an entire segment of the farming population that's just not going to plant a crop, right? It's going to go into prevent. And so there's some things that come along with that, but it's a big dynamic that's going to play in that. So you couple that with crop prices, you couple that with, you know, kind of run down the list of things that are there, it's interesting to watch how the auction market is reacting to those things, right? Because I get the 1 to 3-year-old stuff for two reasons. One is dealers out there right now taking a look at what they have and they're not really ready to run it through the auction yet. And because of the hits that are going to be associated with that. And if it does go to an auction, you have to have buyers show up that want to spend 400-plus thousand or 500 thousand dollars for something like that. I mean, again, the buyers associated with that are going to be... they're kind of driving that marketplace. The tough side of this, Greg, is that it's just like there's a lot of things out there that are pointing towards just, you know, how much more gas is in the tank? And I think that's the question I keep asking people. You know, when you look at what's out there, and are we really headed to a bigger, more dynamic issue on the farm economy than what we can even direction out? Be interesting to see what happens, right? Because we had Xi Jinping and President Donald Trump got together and all the stuff came out about how he's going to come out and buy all these beans and all these kind of things. And be interesting to see how the market reacts to that and what does that look like and what's the time frame and how soon and all that kind of stuff. Be interesting to see how the market reacts to that, right? Because it was a pretty substantial number on top of what they're already doing with what I'm supposedly doing on top of that. So it'll be interesting to watch how that plays out, right? But as it sits right now, there's just so much pressure on the market from every angle, right? I mean, there's not... usually when something like this happens, you have some angles that are like, 'Okay, we can go down this path. It's not nearly as bad. We can go...' I don't see a clear path anywhere that shows any real dynamics of alleviating any pressure. And that's the sad part about what we see happening right now.
Yeah, yeah, you're right, Casey. There's just not a lot of positivity. I mean, that was welcome news from the visit to China, but again, I think the market and people are not being jaded, they're just being realistic. They're like, 'Okay, well, announcements are awesome, but, you know, is the ink dry? And is this going to happen?' So hopefully, you know, we could argue that the one thing... it is interesting. You know, I take those two data points again. When you look at particularly the number of 1 to 3-year-old units, the drop sold at auction so far this year. If we really step back far, if you were putting on your manufacturer shoes, of course, you know, we have the farmer viewpoint, you know, the struggles, the pressure, the realities they're dealing with, stretching out their equipment life. Then you have the dealer reality, which is, you know, trying to manage inventory and hopefully new sales get going. Then there's the manufacturer corner. The one positive for me for the space long term, again, mostly talking about from the manufacturer point of view, is that the overhang of 1 to 3-year-old stuff is not what it was 10 years ago or, frankly, in any previous downturn this magnitude. Now, again, if you're a manufacturer, all you're waiting for is a spark. It's like, 'Okay, corn and beans, wheat, you know, everything shoots up. Here we go. Farmers got money, they spend it. They got to update things.' But back to your point, where is that positivity going to come from? We all know farming, I mean, in agriculture, it's very cyclical. But there is a growing tiredness, no question. So I deal in data, hard numbers, and we analyze all that, but I also just from humans in this space, you talk to a lot of people, and you listen to a lot of things. God gave us two ears and one mouth. But I did... it was on a podcast, a farmer podcast, about a week or two ago and it was a really interesting comment from a younger farmer. And he'd... to be my age, you know, I'm 60 or whatever and it's easy to be the gray-haired guy going, 'Oh, back in my day, blah, blah.' And that's fine. But this young farmer chimed in and said, 'You know, if I could just, you know, if I could just have a thousand acres and it paid for equipment and a semi that was paid for, man, I'd be happy as a clam.' So that's really interesting to me because this, you know, from the mindset... frankly, if you're doing an ag podcast, you're probably most likely a pretty progressive type of producer with eyes looking ahead and growing your operation and stuff. And then to hear that mindset, which is just being very honest, I thought. And it's a reflection of all these mounting pressures. It was already bad and now you pile in. What's fuel cost? Oh my god. What fertilizer? And okay, we can maybe model through '26, but what the hell does '27 look like? I mean, that's concerning. But, you know, over the arc of time, you look back, these periods do present opportunities for everyone in the space, for farmers, dealer side, manufacturer side. Now, none of it's easy. But this is a real period of change and this is different than anything I've seen before by a factor that's really even kind of hard to write about.
Yeah. Well, that's... you know, you can sit and say, you know, there's plenty of opportunities that come and it's what your position is when you get to those opportunities. Here's my... Here's my biggest fear. It's a photograph. Yeah, exactly right. One of my biggest fears about this is that we do go out and there's... you see a step up in the marketplace. My biggest thing with that is the hole of which they have to dig themselves out of when they do get that capital. So when you start looking at where's that going to go and, you know, you're going to plant next year's crop and you're going to get right at the bank and then whatever's left over you might move forward. My biggest fear that I have right now with a lot of this stuff is that when it comes to new sales or equipment, that's going to be a small percentage of the farming population that can afford to go out and buy that. And then the slightly bigger side that can buy the one and two-year-old used stuff and this slightly bigger stuff so on and so forth. What I have a concern about in the marketplace is that when you get to that five-to-10-year-old stuff, which you know, you back and look at your auction that he just talked about. That's where the big boom at right now in the sales last stuff. And if you're looking at how that stuff plays into the marketplace, in order to get a three-to-five-year-old piece of equipment on the marketplace, you have to sell a one-to-two-year-old piece to somebody so they'll trade that in. Right? And then you have to do the same thing with, you know, if you're looking for a six-to-10-year-old or something like that, you got to trade a three-to-five-year-old piece to sell out to somebody so you can trade that piece in. And you start the diversification as it comes across the landscape. That... does that kind of leaks out across the entire industry. We're talking all the way from dealership side to the farm shed to wherever it might be. If you start looking for something and it gets really tight to where you can't find it. That drives prices around to where when the next time that stuff starts to normalize out again, where were you at on the scale when you bought that, right? Same thing that came through COVID, right? Same thing that came through to the 2010, 11, 12 boom, right? Where were you at when you bought that stuff? And then when it comes back in your marketplace, what do you, you know, when you go to trade it, what's your equity position look like and those kind of things. Now, I personally think we've hit a new normal in what the market looks like. I don't think... I just don't see where manufacturers are going to go out and push out, you know, hundreds of, you know, thousands and thousands and thousands of machines like they have done in the past. Just because of the population that can afford to buy, right? That's what it comes down to. Even at any discount structures that you're talking about, those kind of things, like again, it just comes back to who can afford to buy. So the amount of equipment that's going to hit the marketplace year over year over year is going to be small, but, you know, if you have one machine you don't have any buyers for, you got one too many, right? And that's where we're at right now. And I think as you look at the marketplace as things tend to smooth out, once we start seeing things roll again, there's going to be a hunger for maybe one or two-year-old stuff. There could be, but that gap, that three-to-five-year-old stuff and that six-to-ten-year-old stuff is really what's going to be the hot market out there. And as I watch how quote-unquote the new normal's going to take place, I look at it from the perspective of there is a dynamic shift in the marketplace as to where and what role a farmer has in and a rancher has in the equipment on their space, in their space and on their lots and in their yards and those kind of things. And the same comment can be made where what role does the dealership have in those machines that they have on their lot and in the overall marketplace because you start looking at stuff that everybody wants, it changes the dynamics of how that machinery flows through the marketplace and it opens up a whole Pandora's Box of things that people aren't, A, I don't think thinking about and B, preparing themselves for what's the quote-unquote new normal look like.
Yeah, well, you've said new normal for quite a while, Casey, and you and I... you were right when you first said it and you're right as rain today. And I'm with you. I, in my Norwegian way, tried to gently alert farmers to it in early 2025. So coming on a year and a half ago. And you could just see it. Manufacturers, I mean, they were... that spigot was shut for new equipment and they were... and frankly were kind of being told, I think, by dealers more so than ever like, 'Hey, we ain't in... don't make it because we... that's how...' Well, we're about, you know, yes, we'll sell it, but we're about getting rid of all this one or two-year-old stuff. So again, two years ago, I'd never seen that ocean of collectively dealers in mass selling that at auction. Now that has ramifications. Sure. And again, a year or two years down the road and we're starting to see this. So the swirl, and this is to your point, this is the dangerous thing for farmers in the space thinking about a downturn and how you navigate it equipment-wise. Maybe thinking about how you did it 10 years ago or how you did it in the, you know, whatever previous downturn at '96 to '98 when, you know, dealers had way too much stuff. Auction values dropped like a rock. The drop in auction prices this time was like a one-year shot, a hard shot in '24. And you lived it. That last downturn, that was not a one-year shot. No. Our auction data showed big drop in the '13, '14, '15. I mean... But again, it's just... it's different now. So you got to be eyes wide open. And to me, this tightening at the top end of the used equipment funnel because of lack of new sales and manufacturers just frankly closing plants. This is different and this is like you said, it is 100% the new normal. And now if you're a farmer, you have to assess it, which I think they are. And I think the first phase of this was it was like, well, we're not going to buy new in '25 and '26 and whatever for '27. You know, we have a lot of equipment which we purchased over the last number of years. Whether they were mud customers or not, wherever they are on the chain. Everyone on the chain was reassessing. Okay, well, let's stretch out the life. But then at some point it's like, well, you have a combine issue or a plant. Okay, so they're turning to the used market. Yeah. And that's why I've been just reporting these pricing has been stronger since the end of '25. We've seen this uptick. You know, I'm looking at numbers today, take a John Deere 8R 370 and the average auction price is up 14.1% this year. Right. You say, well, how the hell does that make sense? It only makes sense in the totality of what you and I were just talking about. Right. Yeah. By the way, that average is 353. Just over 353. So that's the new normal and, you know, from all sides of that, manufacturers, dealers, and farmers, you know, we're all tiptoeing forward. And sometimes when I again, when I talk to the Wall Street crowd, I talk about, you know, a spark or a match, a lit match. This is a pile of matches sitting there and then no one knows an egg when the whoop corner bean went up. We don't know why or when, but the thing is when the match goes, it goes. Right. And from where I'm sitting, it just looks like... and we hope the match goes, corn and beans go up. Boy, I'm telling you, when it goes, it might... it's going to be tighter than '22 was, I think.
Yeah, I think so, too. I think it'll be tight. I think it'll be... but it's a different kind of tight because in '22, there was still plenty of money going around. I mean, if you look at some of these operations, you know, 40 to 50% of the money that was associated with them were tied back to various COVID relief programs, right? So, I mean, and those are all taxable... that was all taxable income, right? So they had to do something with it, right? So as you start looking at today's marketplace, the difference is going to be a lot more organic when you start looking at how those things relate. I can just tell you from experience, though, when there's a huge gaping hole in the machinery marketplace, it stagnates the market and it actually does more damage than you think it does, right? I mean, yeah, you see all this stuff turn... 'Oh, this is great. Look at all this stuff going through auction. These things are bringing, you know, all-time record high dollars and this, that, and the other thing.' It stagnates the marketplace on both ends of that. It's bookmarked by things that are just... that are dead in the water, whether we're talking things younger than them or older than them. And those are just the issue. It's all the front of that. It's... Yeah, and it just... and it really does mess the market up in a lot of ways to where it drives behavior in a different manner than that's good. And then it also drives decision-making processes that again, I think... again, I go back to this state again. Whatever you're buying today, plan on having it for a while. Don't... your next move shouldn't be in a couple years I'm going to go do something else with it because you're absolutely buying, especially if it's fallen into that 5 to 10 to 12-year-old range, you're buying it at the top of the marketplace. I mean, you're there... you're at the absolute top of the market. So, but odds are people that buy that kind of stuff aren't going to roll in 2 years, right? They're going to... their idea is they're going to run it for a while and that's what they're doing. So, that being said, understand where you're at in the marketplace.
I think the one interesting thing too we've touched on a little bit is as this has stretched out for a longer period now, it... and it's a different world we live in, connectivity and social media and stuff. So, the danger is... So when I said I'm waiting for that spark, that was kind of based on the 36 years what I've seen when the spark goes poof, auction values take off, new sales take off. Well, open question now, like that young guy I referenced to said, 'Man, my dream...' you know, his dream had shifted. So all of a sudden if corn and beans go up and this has gone on long enough, is that guy going to default back into the previous mindset or is he going to carry some of this new mindset like, 'Well, yeah.' And like you said, there needs to be a period of making yourself whole again. Right. Dealing with what we've come through. And how many farmers have we lost? You know, so I'm sitting here saying 19.5% jump in the raw number of auction events. I mean, look at the dairy numbers. And that's been just happening right and left. I mean, it just cranking downward until you wind up where you are. And then it's like, 'Well, how'd we get here?' And it's like, 'Well, water torture drip by drip until here we are.' So, yep. Then again, that goes back to your new normal. So whatever, you know, there's no positivity looking for like the things going... that spark's going to go. And then even if it does go, how does that play out? So it's just we're kind of in uncharted waters here, which is... which is interesting, but if you knock all of it down, as I tried to right now, Casey, I see it in the auction prices, which always kind of tell stories. So yesterday when I saw New Holland, now it's like some people might say it's a weird example, but an old New Holland 273 baler sold on an auction up in about an hour north of me in Randolph, Minnesota. Hamilton Auction Group had the sale. And it brought 4,250 bucks. Now, I've seen over 600 of those things sold, and that's the sixth highest one ever. And it hasn't rained... it's dry as a bone here in Minnesota, but we all know what, you know, could be hay equipment, could be planting equipment, anything. What's the new stuff cost? And here's an old burger warhorse, but ooh, that thing's nice. That thing is reliable. So there's the premium. In a time when you'd say, 'Well, why is there a premium on used equipment?' Well, again, take everything we've said and swirl it together, and that's where we are.
Yep, for sure. So much stuff to pay attention to. Man, if you're listening to this and you're thinking about, 'Hey, what's my next move? What's my next... If I'm going to buy this, do this, or I'm going to do that. If I'm going to trade this, I'm going to sell my own...' I mean, like there's so many dynamics that play into that. Weigh all of your options thoroughly, and really think about it, because there's no rush here. And you know, the decision that you're making right now is going to be one that you're going to have to live with for a couple of years at a minimum. And go for it. If you're selling, you're in a great spot. If you're buying, I'm not saying you're in a bad spot, but I think... I really do believe this though, Greg. I think this, if you're buying or selling something right now, I think you have equally as many advantageous points as you do disadvantages. I mean, I think so. I think you're at a... you're in an even... you're even. It's just... it just takes a little more thought, I think.
Think again. What you just said equals what I said earlier about not all of this done and the focus is on the used side. Yep. So for example, on Friday, one of our followers, a friend of mine from New York, a farmer, sent me a note. He said, 'Pete, I got a Hardi Ranger 2000 pull-type sprayer for sale. This bugger is like new. I bought it a while back. I thought I was going to get into some custom and I just didn't have time. Got under 1,000 acres on it.' He's a smart guy, really smart. And he's listed on our Machinery Pete website for 29.5. But in the listing, he says, you know, kind of by the way, if you want a new Hardi 2000 Ranger spec like this, it's going to cost you 55K plus. So to your point, buyers and sellers, it's all about cost of new makes the used attractive either way. So someone's going to get a like-new sprayer there at a good fair price for my friend Ed. Ed's going to hopefully be able to move it quickly. So, yeah, that's kind of where we are.
Yep. Lots of stuff to pay attention to, Greg, and appreciate you being on the podcast every week talking about it. So if folks want to reach out to you and get more information about what you're doing, easiest way to go to hit you up on your social media sites or go to machinerypete.com?
Yep, little message button on the bottom of machinerypete.com, drop a note to our office. I did have a guy ask me last week, Casey, sent me an email, he's from California, farmer, and said, 'Hey, Pete. I don't know if you do any of these Dear Abby type questions.' And I was like, 'Hey, bring it, man.' He had a trade-in valuation question. He was very much honored, but just like your listeners moving out here, and it's like, appreciate your feedback, and gives us more good stuff to talk about, right? Right on. For sure.
