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 to the Moving Iron podcast. Clinton Griffiths here with the man, the myth, the legend, Casey Seymour. Casey, appreciate you jumping on to talk about, you know, the latest comings and goings in the equipment industry. Hot topics for you this week. What's been on your radar as we kind of get, I want to say, into the, we're kind of getting near the heart of harvest season here.
Yeah. Now, I'll tell you one thing, Clinton. So, you know, Greg and I have talked about this a lot over the course of the year of where things, you know, coming out of the quote-unquote doldrums of May and June of typical auction dips and how that comes back out and then what that looks like coming through. One thing I've always talked about in my over my career is that it takes about, the auction market heats up and it takes about six months for the retail market to kind of start kicking in. And we're slowly starting to see that right now. Someone's listening that's going like, I don't know what you're talking about, Casey. It doesn't look like much to me because it's not like 10% or 15 or 20% or anything like that. But you know, if you look at some, like I'll just pick on 8Rs for a minute. If you look at some 8Rs over the past 60 days and look where their, what their retail value was and where they sold at and what their retail value is today and where they sold at, you're seeing a two and a half to 5% increase, right?
Which is, you haven't seen that movement at all. I mean, like that for a while. Usually it's been in the opposite direction. So watching that stuff move, you're seeing some faint movement in combines. Not much, you know, start to see some stuff there. And NR, you know, the four-drive marketplace has been a struggle for a while. And there's some movement there. Not a lot, but some. But so as I'm looking at this, it's been about, it's been a year to six months that the auction market's really been creeping up. And you're starting to see that spill over into the retail marketplace, which tells me that we're on an uptrend as far as values go. And, you know, obviously quantity prices are having some effect with that. But as I look at this, that's one that's most, that's what I'm most excited about, right? Because, you know, we've got used equipment all over the place to get moved and you got guys out there looking to buy and update their fleets and there's going to be some opportunity to come back into the marketplace with some upside instead of downside to their trade values.
Yeah. And Casey, we're seeing some of the big OEMs start to make some movement in a positive direction this week. You know, Deere announcing they're going to bring back 375 more employees to work at its Quad City facilities. Say they've already brought back 800 across Iowa and Illinois since January. So, you know, as you start to see them ramp up some production, that means their forecasts are starting to tell them that there is some interest out there in this market.
Yeah. You know, I'm a history guy. I always go back to, you know, looking back on, you know, the trend lines and touch points throughout my career. And if you go back to the great recession and look at 2008 and how that, you know, what the OEMs did then, they shrink their workforce and they, you know, never really hit a hiccup during that time frame. The rest of the economy did, but, you know, really took off and ran during that time frame. And if you go back and look at late 2009, 2010, that's when they started really ramping things back up. 2011, huge order writing periods. 2012, huge order writing periods and going so forth as you work your way through that. Now, used equipment was a completely different animal back then than it is today. But as you're looking your way through that, I kind of feel like this. So, if I'm sitting here looking at my fleet as a farmer and my fleet as a dealer and I'm looking at what's going on there, I'm going to go back and start having some hard conversations about not necessarily dollars, but percentage of machines. What did that look like? As we came out of 2009 to 2010 to 2011, it's kind of starting to feel a little bit like that right now.
Yeah. You know, you mentioned the broader economy, you know, back then and how the economy seemed to work its way through that whenever we were struggling back at what, 08, 09. We look right now, there's some headwinds out there. You have fuel prices, we've got some record diesel prices that we're dealing with. Obviously, interest rates, they raised those for the first time in three years. As you look at this bigger picture for the overall economy, what do you think that weighs at all here or dampens any of the energy that we've seen here in the last month?
It hasn't so far. I mean, we're seeing more quoting. We're seeing more people come to the table and look at buying stuff. I was a little bit concerned about that. You know, seeing $6 diesel diving up down the interstate, you know, you thought, you know, then you roll back off-road diesel somewhere in that, whatever that is, five and a quarter or whatever that is for off-road diesel. You would think that that would dampen some momentum that we've seen so far, but I can't say that it really has yet. I mean, it's conversations, you know, we hear that. And the interest side of it, too. Yeah, interest rates went up, but they went up a quarter point, right? So, you throw in a quarter point on six and a half or seven or whatever it is. I mean, yeah, it makes it different. So, I'm not trying to downplay that, but it's already high, you know, so they're kind of used to that. But, you know what I mean? So, that's really good perspective. It's already high. It was already up there. So, it's, you know, whether we wait another six months or we wait another year for it to try to find some sort of new low, I think is kind of where we're sitting at.
In terms of what you're seeing out there from interest in like repairs and maintenance, are there anything that folks need to be thinking about on that side of the coin? Supply chain.
Yeah. So, it's harvest time. I mean, there's some supply chain issues out there that people are fighting through, but that's, I know it's just like, it seems like that's, I don't know if that ever really ever got fixed after COVID, to be honest with you, man. I mean, it was like you had some glimmers of hope here and there and things would happen and then, you know, systems and those kind of things, but it's just like, I just feel like, you know, I still haven't got my overnight mail overnight, you know what I mean? Like it still takes three days to get overnight mail, you know what I mean? So, it's just like none of that stuff seems like it's ever gotten fixed, right? And so they're still working their way through that. There's still issues with those kind of things. But I would highly recommend this, you know, and this is stuff that I've talked to people about over the years, but you know, when you're looking at going into harvest, that is a time when, you know, time is of the essence, right? You know, there's things going through there. I'd have a hard conversation with your dealership and say, "Hey, here's my machines. What should I have on hand that I can take care of, that I can get things moving, right? And what should I have here?" There's a lot of guys that'll do that where they can set you up with a mini parts department inside your facility and then what you don't use you can send back. But that peace of mind knowing that, hey, I've got these, I got that, if I need sickle sections and guards or I need whatever, you know, I've got those things handy and I can make that thing work and I won't have to wait on going to town to get a part or where the parts at. It's, you know, it's not this store, it's, you know, it's 100 miles away in another store. And, you know, kind of things, I think some pre-planning when you start looking about your parts and how you think about your harvest progression, think about that a little bit when you're going through there. That's the biggest thing I can say to anybody.
Yeah. And that's good advice, especially after the, seems like the lessons we've learned over the last five or six years. Probably a good way to go, especially if, you know, up and running is the most important part. And, you know, Casey, as you've been talking about, maybe we're changing the size of the fleet here. Maybe it's not as many machines that are going to be out there. So, we got to keep the ones we do have running.
Yep. Absolutely. I think that's, you see that's a trend that I'm watching happen more and more is where, I mean, I've heard this conversation several times. You know, my dad and grandpa farmed with four tractors and I'm doing the same thing with eight. Like, do I really need four more tractors, right? I mean, it's like the convenience of it. I get it and those kind of things, but there's some of that peel back that you see as these fleets shrink. So, the average hours watching roll across the, as I watch things come in and out, is that less machines are being across more acres. So, you're creating more hours, season of use stuff and those kind of things. So, as you watch that through, what used to be 200, 300 hours worth of season use now is they're starting to creep into like that 350, 400 on average. So, you're starting to see that creep up a little bit. And especially even some of those older machines, those five or six year old machines where those used to come in about, you know, you see some three, four, five year old machines that come in at 1,500, 1,700, 1,800 hours. Now, you're seeing them come in at 2,500, 3,000.
Yeah, there's a super interesting trend to follow and watch. Hey, I got one more for you, Casey, to talk about this week. This is a little bit of a water cooler conversation, but USDA came out with some new numbers. Basically projections for the big crops over the next, the eight major row crops over the next 10 years, and they're going to forecast that overall acreage falls by about 6 million acres over the next 10 years or so, about 2.4%. Does that surprise you? Does that change the way that the, and maybe it just goes along with the conversation we're having in this equipment market?
It's USDA, dude. I mean, how often are they right? If I can guess how many acres over the next 10 years are going to be planted, we're going to quit talking. I want to be on an island someplace. You know what I mean? So, yeah. No, I got you. Well, and from that perspective, I think, you know, yeah, a lot of it they're pulling from cotton. We've seen that acreage continue to decline. Some of it's from wheat. We've seen that acreage continue to decline. You know, from that perspective, I think, you know, there are some trends there that probably stick with us. There's the solar panel, the data center, there's the, you know, urban sprawl. So, yeah, I mean, I think over time you're going to lower some acreage numbers. You know, is it going to be a huge amount? Is it going to be a full 2.4% or six million acres? I don't know. I don't think we do know. But, you know, it's just something that the industry's continued to deal with.
Now, the flip side of that, Casey, is that great equipment that we're running is helping us be a lot more productive and continues to help us hit every metric we need to hit. So, I think, you know, the other side of that, people always ask me, hey, do you think we'll be able to feed the world population by 2050? And my answer traditionally has been, well, of course we will. I think we, I don't have any doubt that we can do it. We're just going to be more efficient. We're going to be better at it.
Yeah. Can't remember what the statistic is, but something like the entire United States population can fit inside of Texas with, you know, certain acreage or whatever it is that they can fit in. So, there's plenty of ground out there to farm. You know, I think you're, there's some good stuff to, I mean, if you look at cotton demand versus polyester and those kind of things and how that, you know, what that's doing to cotton demand, those kind of things. But we start looking at corn demand. I mean, if you look at where supply is right now and carryout spend, those kind of things over the last five years or something like that, the actual carryouts shrink every year. I mean, the actual physical number of bushels that are out there are shrinking, right? So either that means we have higher demand or we're growing less corn. One of the two, and it's somewhere along those, it's one of those two things or a combination of both. Right. Right. So it's as you watch that happen, you know, we kind of need to grow 100 million acres of corn every year to make that work. And we need to have a trend line yield to make that work every year. And this year, if we're below trend line like the Pro Farmer tour came back, that's going to have a huge effect on carryout, what that looks like. So, we're kind of at the brink right now, like a just-in-time inventory for corn, and you start throwing a bunch of hiccups in there, some stuff out of South America and those kind of things as far as weather demand goes, you could see some really big numbers that can maybe kind of curb a little bit of this urban sprawl that we're talking about where, yeah, farmers like, you know, hey, I'm going to grow one more crop and see what happens. You know, I'll sell my land for 40 grand another day, you know?
That's right. I'm going to stick with it. Yeah, absolutely. I think that's true. All right, Casey, give me your parting thoughts for this week. Your big takeaways. What do folks need to know?
I just, you know, keep close attention. If you're in the market to buy something, no better time than now to do it. Everything's going to higher prices through the end of the year, mainly into the first quarter. So, if you're in a position to buy something that's on your radar, I'd highly tell you pay less now than or pay more later. I think that's how it's going to be.
Great advice, Casey. Appreciate it. Thank you so much for being with us again this week. Machinery Pete will be with us next.
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Welcome back to Moving Iron. Clinton Griffiths here and I've stumbled across our good friend Machinery Pete. And Greg, you've had quite the busy week this week traveling to our neighbors in the north this week to spend some time with folks.
Yeah, I had a great day yesterday, Clinton. I was on my feet from 8:30 a.m. to 5:30 p.m. talking to farmers all day, hanging out in the Ritchie Brothers exhibit, our great friends at Ritchie Brothers. And yeah, it was really interesting just to talk to farmers. We're up in Woodstock, Ontario. Ontario is, I've just always been fascinated with the variety of agriculture there. So, it was a great day, of course. Yeah, farmers in Canada, I think, are, you know, trying to wrestle with some of the, well, obviously the tariff situation and, you know, all the news changes day by day. So equipment-wise, it tends to shove farmers into a wait-and-see mode. Okay. So we haven't really seen new sales even though corn and beans and wheat, you know, commodity price has been a good welcome move higher. It hasn't translated into new sales yet, but on the auction market, squarely farmer focus there. So good condition used is really doing very well at auction.
Yeah. So, it's a little bit similar to what you're tracking here in the US in terms of over the last, what, few weeks or couple months where you're starting to see some momentum build.
Yeah, for sure. Again, if it's good condition used, and I think the driver even this is the thing, Clint, is we started to see this increase started back in the middle of June where auction prices were strengthening. Now, historically, the 37 years I've been doing this, that's pretty unusual to see it jump in June because, I mean, you just put the seed in the ground not too long ago and it's like you don't know how it's, we don't know how it's going to come out. So, again, almost the four decades I've done this, it has not happened much. And then after crop tour, when corn and beans took off, auction pricing, that was immediate. They just went another notch and a half higher on the good condition used stuff. And that what it's playing into is the fact that collectively farmers, I mean, it's this truth, the price of new is very high. It just is what it is. And so I've also never seen a coalescing mindset to this degree on the farmer level of just, you know, we're kind of looking used. And so when we do see good condition used equipment at auction, I mean, right before I hopped on the call here, I got another report out of Greta, Kansas a few days ago from my friend Tom Schramm Auction. It was a retirement sale for Keith Br. Very strong price across the board. I mean, 2018 model 8295R, 655 hours, 270,000 bucks, 8 year, almost 9 years old, I'm pushing 300K. So that gap between what a list is on a new one and what you can get it for auction is pulling. You know, it's farmers haven't been buying new now three plus years. So, you got to keep farming. You need what you need and that what they want is the best used stuff. So, we're seeing premiums at auction.
Yeah. As you start to pull in some of that data and put some perspective on it, I know you've been crunching some numbers here on the one to two-year-old used. What is that looking like in terms of, you know, even demand and availability?
Yeah. So, Clinton, before we hopped on here, I just mentioned I just ran some numbers, really, really eye-opening. So, I don't like to talk in generalities. If I'm talking to the farm audience, I like to back it up with our data. I always have. That's why I started doing this 37 years ago. So, there's different types of data. People know me for talking specific auction pricing, but we also track volume both on dealer listings, which have been going down, particularly on the late model one, two, three-year-old stuff, which if you think about it makes sense because sales of new have been crappy for three years. So obviously the amount of that stuff. So if we look on the auction market, I was curious on the amount of one to two-year-old units sold at auction and I just said, let's look at everything, all types of equipment. So compared to two years ago through yesterday, September 16th, if we compared 2024 to 2026, that same time period, 84.2% less one to two-year-old equipment units sold at auction. Oh wow. I mean, 84, that's a humongous drop. What that's... And that's, it's even more amazing, Clinton, when you consider we've got 28.8% more auctions versus the same period in 24. So you've got way less auctions and way, way, way less one to two-year-old stuff. So what does that tell us? It tells us there was a big problem two years ago on the dealer lots. They were stuck. Now that was not new. Frankly, that's happened with every slowdown the four decades I've been doing this and way before me. When farming is so cyclical, when times are good, dealers sell a lot of new equipment. When times, corn and beans go the other way, dealers get, you know, they get stagnant with one, two, three-year-old stuff on their lots. And honestly, I've never seen two years ago such a coalescing mindset on the dealer level. Now there's fewer dealers. They're much larger, but they, you know, they had a problem. They're paying 8% interest on all this high-priced one, two, three-year-old stuff on their lot. So basically they said, you know what, our focus, it ain't on selling new right now. It's on working down out from under our late model used situation. So that's why we saw the avalanche of late model stuff taken to auction and, you know, frankly, dealers got clobbered on it. But if you have 40 or 60 stores, at a minimum, structurally, you're capitalized different than the old way, like my dad had two stores. And if you had two stores, you could not take your excess out to auction because you'd have been out of business. So now, again, that's that 84% drop compared to two years ago on the one to two-year-old stuff. So it's beginning to affect things. So, for example, September 2nd, close to me up in Faribault, Minnesota, it was a dealer auction, Matach Implement, and they had two 25-model KIH Steiger 715 quad tracks. Now, they were a little higher hour. One had 1,188 hours. Now, that sold, it did have warranty, but it brought 513,800 bucks. Now, that's a little bit higher than I thought it was going to go given those hours over, you know, 514,000 bucks. If you wind it back to March, just to give you an example how things have changed, we saw another 24-model 715 quad with 812 hours on it go for 491,830 US. So, here you've got a third more hours, six months later, and it goes 513,800. So again, and that's on a two-year-old tractor. I think the ag audience thinks maybe these used values are only rising on the pre-DEF stuff, which they definitely are, but it's also now beginning to hit the one, two, three-year-old stuff. Again, because there's so much less of it, you know, available.
