Welcome to Moving Iron with Casey Seymour and Greg Peterson, the podcast for anyone and everyone involved and interested in the business of farm 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 Griffith here with Casey Seymour. Casey, how you doing this week? Busy week out there.
It is, man. Good to see you, Clint. Hey, man.
Doing all right. Doing all right. You know, folks out there running hard right now trying to get this crop out. Still hearing tons of chatter about, you know, the quality of the crop and the challenges of the rain that we've had out there.
Then you got a hurricane coming on top of that, right? So it's another monkey in the middle of that. So yeah, I hear the same thing. You know, you look at what's going on. Either you're having a great perfect harvest and everything's going like it should, no issues, or you're having the long drawn out quagmire of a mess that the harvest can be sometimes. So it's a tale of two, right?
Yeah, absolutely. And of course, you know, it's busy. We're pushing the machines hard. We're out servicing those machines. We're keeping them in the field, keeping them running. I did hear this week that, you know, we harvested some soybeans and they were pretty wet, and when I got into the machines, they kind of just squished up and turned to mush. And I can't even imagine, Casey, like what's required to clean that after something like that happens. I mean, it just seems like an absolute nightmare of a mess to try to overcome some of that stuff.
I know how hard it is to clean a combine just in normal conditions. I couldn't imagine much any other way like that. It's got to be a... that stuff gets in there, man, and it just finds every nook and cranny to get into it.
Yeah, it's a tough thing to do anyway. No kidding. Um, you know, if we talk about kind of what's been in the headlines this week, some interesting things. This diesel story that's been going around. Didn't see like there was an executive order from the president to kind of have some emergency tax relief on diesel fuel and then easing some of those restrictions on using that red or dyed diesel for on-road vehicles without penalties. What's your read on this? Do you think this helps solve our $6, $7 diesel problem?
Uh, I mean, no. It's... I mean, it's going to alleviate some pressure in the short term, but... I mean, there's only so much red diesel out there, right? So, and they don't... there's probably... I don't know what the proportion of red diesel to normal on-road diesel is, but it's not like it's parity by any means, right? So there's going to be... it's going to alleviate some pressure somewhere for a little bit, which, you know, every little bit helps. But as a long-term fix, I mean, the long-term fix is refinery capacity. It's not... it's not anything else, that's what you have. But unfortunately, it'll take a decade to build a new refinery in this country. So that's part of the problem there. You want my opinion? You want to fix a problem, let's go build some refineries, right, you know.
Well, and it is one of those things where like, yes, we're in the middle of this crisis now, but this... and we've been building toward having an issue for years. This isn't just a, you know, just a right now problem. This has been, like you said, a refinery capacity issue for a long time.
Yeah. Yeah. So I mean, I think if you look at refining capacity right now in most places, it's like 98%, 99%, you know, almost 100%, which at some point in time, like, there becomes a safety issue there if you run, you know, too high a capacity, you know, so...
You know, I just look at this and it's just capacity, it's the problem, you know. And here we got this hurricane coming through and through the Gulf Coast area and there's going to be some stuff in there that's going to get impacted. So we'll see what that does to prices, too. So I mean, it's just... this is not... it's just not... it's a bigger deal than just we're going to throw some red diesel in there and hope it works.
Yeah. Well, you know, and I do have seen some stories that, you know, they're starting to have a little more movement through the Strait of Hormuz. Um, you know, that's starting to loosen up a little bit. But, you know, will this executive order allowing this off-road diesel... I mean, there's only so much of that to go around, right? So at the end of the day, I do think it'll help a little bit short term. I think, you know, you may be able to put it in some semis or whatever and haul if you're hauling grain or to town or you've got some trucks that you need to fill up, maybe it's going to help a little bit there. But, you know, for how long and how much, I think that remains to be seen. It is a longer-term issue. Bigger picture, man, I would just love to see that price start to come back down because I think that would help all of the economy more than, you know, even though we're in the middle of a busy driving season here in agriculture.
Hey, one of the other headlines I saw this week, I thought it was kind of interesting. This is out of Washington as well. The Federal Trade Commission and the USDA teaming up to start some sort of investigation into whether equipment manufacturers and distributors are using market power to unfairly squeeze farmers. That's been talked about before. But, you know, they've done kind of some of these formalized investigations in several sectors in this administration. So I think it is interesting. They're going to ask some questions. They are asking farmers and, you know, dealerships and people that work in the industry to kind of weigh in on it. I don't know. I guess we'll see. It was a headline this week. It's something that we'll just kind of follow along, I guess.
Yeah. Yeah. I mean, I think real quick, one thing on the diesel thing. One more thing. You know, red diesel's just dyed diesel, right? It's not like, you know, I mean, so it's not going to fix it. That was the last thing I wanted to put out there. But that's right. But, you know, the FTC-USDA thing, you know, they've bantered around with this for a long time. I've heard the same, like, we're going to go investigate this and investigate that and, you know, we're going to go after, you know, look at market power and those kind of things. Um, you know, from a monopolistic standpoint and those kind of things. And, um, you know, I kind of go... I get it. I get where they're coming from on it. I understand the issue with that and, you know, people want to lower the price of equipment and I get all that too. Totally understand that.
Um, taking a piece of equipment that comes off the manufacturer's line today and if you go and... and this is, I'm just throwing a number out there. Say we're going to go lower the price of equipment by 20%. And it's the exact same piece of equipment that's out there. The used equipment impact on that is almost two and a half times what it would be on that situation. So you're lowering the new by 25%, you're going to be 50 to 60% on the used side, right? So whatever on your balance sheet now is going to have a huge, huge impact on that.
Now, is there some things that they could look at and point at and say, 'Hey, you know what? Let's look at some different option specs that are out there and we're going to roll out the Ford XL pickup package for a piece of equipment and not the Platinum Edition and stuff.' Yeah, there's a lot of stuff you can do with that. And there's a lot of options out there that you can look at and those kind of things and you can really finagle your way through that. But really at the end of the day it comes down to the price of equipment got crazy during COVID, right? And so did everything, right?
You run down the list, right? There's nothing that hasn't been affected by the price of COVID or the things that happened in COVID. And the bad thing about those kind of things is that once prices go up, they just stay there, right? They don't really go back down, right? No matter what production costs look like. So there are some things out there they could address around that. Um, you know, some like quote-unquote dumb tractors, for example, you know, like there's a lot of technology on those machines that you can look at. But I would encourage folks, if you're looking at stuff, take a hard look at what you actually need on the farm and make sure you understand technology levels, where you need technology, where you don't need technology, those kind of things. Because, you know, somebody out there packing silage on a silage pile needs a lot different tractor than the ones that are out there, you know, running up planter, right? It's a different animal. So I would just encourage that thing.
You see these things come out. The government does this kind of stuff all the time. I've heard them talk about this for five or six years now. This is not anything new and they've done nothing with it, but it's gone nowhere, right? And so I think it's just funny how this kind of stuff comes out right before election season starts too, right?
Oh, well, it's the season. That's exactly right, Casey. Yeah, it is the season for that stuff to come up, you know. And I do think it, you know, it is interesting. Sure, we can ask questions. We want to make sure that people aren't getting taken advantage of. I'm all for that. I think that's fine. On the other side of it is, you know, there's a... like you said, there's a lot of other things that factor into some of these prices from the cost of raw materials. Do we have enough capacity here for that? What's the cost of labor? What is the technology expense like you mentioned? Like, do we need all of the technology that we have? I think we find that true in our vehicles. We find that true in a lot of different aspects of our lives. You know, just because it's possible doesn't mean we necessarily need it. And I think you're right in making the point of like using the right equipment with the right packages for the right tasks that they're meant for and right-sizing that as you look at, you know, kind of what we're seeing out there in the equipment market right now, making some of those purchasing decisions. What's going through your mind right now? What are you thinking about? What's got your attention?
I think on a used front, look what's on the lot now with a lot of these folks. You're going to see good opportunity to buy stuff at a different... probably we've talked about this before, but I just look at pricing today and where I think pricing is going to be 60 days from now. And I think you're going to have a better opportunity to get a better deal today than you would going to be able to get in 60 to 90 days from now. And I think the reason for that is there's still, you know, there's plenty of aged equipment out there. You hear some dealers talking about how they're out buying some stuff and those kind of things, but they're buying specific things for specific holes inside their inventory and they still have plenty of other stuff laying around out there. So I think I'd just take a hard look at what your dealership has and what they have to offer and what are your needs and start running down that avenue with them about what do I need and what I don't need and where are the deals at for me, you know, and take a hard look at that, shop around a little bit and make sure you're seeing, you know, eyes wide open when you go in to make that deal because there's plenty of opportunity out there to see some low-rate financing options out there. I've seen a lot of 24-month waivers. I've seen a lot of, you know, 3.9% stuff, you know, out there on those kind of things. So look for those kind of things and see what kind of advantage you can take of when you're looking at those.
You know, Casey, we talk a lot about, you know, certain times of year and always the end of the year seems like a really big time for equipment when people are making decisions about, you know, what do they need, what are the tax implications and on and on and on. Are there other times of the year that maybe there's good buying opportunities? You know, like, you know, hey, TVs right before the Super Bowl. We know that that's a great buying opportunity. You know, are there other times a year when you should be thinking about different types of equipment at different times?
I mean, yeah, I see the seasonality of equipment. You know, the push... one of the best times to buy used planters is right after the new order item period closes, right? That's typically a good time to buy a used planter if you're looking to do something like that. So that's, you know, that June-July timeframe, right, for next year. So you've got a whole year almost before you're going to go back and fill with that thing, or nine months anyway. And then if you start looking at, you know, if you have time to do it and you've got time to look for it, you know, combines during harvest, that always seems to be typically... I'm talking spring harvest, you know, wheat harvest, those kind of things. And then if you start looking at like the peak times, you know, that January-February timeframe is typically a pretty decent time of the year as far as traffic goes because again, folks are not doing much and they've got some time to think about it. So there's a lot more demand during that timeframe. After harvest, after spring harvest is typically a peak time. You see a lot more demand during that timeframe. Again, they've harvested that crop and if they do a wheat crop and a corn crop or whatever, you know, double crop and beans, whatever it might be, they kind of know where they're at for the year. So they're going to make some buying decisions in that June-July-August timeframe. And then where we're at right now, that October-November-December timeframe, those are all the peak times of the year. So anywhere inside of that, there's not a lot of buying going on. So if you're, you know, March through April, you know, if you're in, you know, May, if you get into that September-October timeframe, those are typically not quote-unquote as busy selling cycles as other times. So there might be some opportunity for you in those timeframes.
Well, good. Good. I think that's great insight and allows maybe people a chance to make some plans and look at some of those windows whenever they're, you know, you don't want to be standing in line with everybody else at the same time. And we all know that's true in ag, right?
Everybody gets paid at the same time, unfortunately. So that's when you have your money. So that's...
That's exactly right. Hey, what's your big takeaway this week? What do you want folks to end their thoughts on or what are their takeaways for you this week?
You know, I would say there's a lot of noise out there right now. When you look around, look at diesel prices. You look at what's going on with the markets. You know, we're seeing huge volatility in the market again, moving things around. If you have a plan and you've put that plan together, run your plan. Don't get over your skis and get thinking about what's going on there. Time to adjust your plan, sure, you need to make those decisions as you're going along. But if your plan is to sell at X, get to that point and make that and hold out. Don't let the emotion overtake you in these timeframes right now to where you are making hasty decisions based around things that are just out of your control, right? So stick to your plan if you got one, which I know everyone's got one, but just stick to your plan and push that plan to the max and then, you know, make adjustments as you need to because when times like this are going on, you start seeing prices start to creep up from where they've been at. You know, sell the crop that you need to sell to keep everybody happy, but I believe that we have some upside coming at us. So stick with your plan, be patient, and don't let the emotion get a hold of you.
Yeah, and I think that's great advice, Casey. It's so... sometimes it can be so hard. These are big decisions for a lot of operations and it's so... sometimes it's just so hard to pull the trigger, right?
Yeah. Yeah. A lot of pressure on these guys, you know, and I get it. I see the guys that come in and how they're trying to juggle all the millions worth of things that they have going on in their mind as well as they have going on the farm and the financial implications of every single solitary thing they do. It's a massive undertaking every year for these guys to go farm. And I've watched a lot of guys sell stuff at the bottom of the market because it bounced back up and now here we are and then took off and ran another $125, you know. And then but I've also seen it go the other way where they should have come back down. So it's just... I just say, you know, Chip Nellinger is one of those guys I've had on the podcast in the past. He's really big on let's talk about your plan. Let's see what your plan is and then we'll make that a plan as we adjust and we can move those things along and how important it is to know what your actual hard dollars are so that you can make those adjustments and those financial decisions as you push way through. But I just, you know...
No, that's really good advice. And I do think having that plan and having something to work off of really helps with, as you said, the emotion of making some of these big decisions. At least you've got a blueprint of something you're trying to follow, you can stick to. It doesn't mean we don't adjust, right? We always adjust life on the fly, right?
Well, Casey, appreciate it. Thank you for jumping in here today. We're going to be back with more Moving Iron here in just a minute.
