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Hi, I'm Andrew McCrae. Welcome to our farm and ranch in northwest Missouri. My great-great-grandfather settled here in 1910, and I'm the fifth generation to grow crops and livestock here. As a farmer myself, I know the highs and lows of this life, the issues we confront every day — some new, some as old as farming itself. This show is a place to talk with farmers and others in the industry about topics that mean something to us, topics that can improve the present and future of our operations. This is Farming the Countryside.
Greg Peterson, Machinery Pete, joins me here on Farming the Countryside. Always good to catch up with Greg. And it's been a few months since we've had a visit, at least on this show. Greg, I know you're always out on the road and busy. I might start with this: this year, as we move into harvest, has changed a lot, at least in prices for some of these grains. I don't know what crop we're going to have. We're just starting to experience that on our own farm. Can you see it translating into machinery prices yet? Or has it made a blip, as far as maybe we've got a little more money to work with than we thought? What's happened to the market?
Yeah, instantaneous result, Andrew. In fact, prior to the move up in corn and bean prices, kind of after crop tour, we'd already been seeing auction prices strengthening. It is isolated to good-condition used equipment, which, I mean, I guess is always the case — there's always stronger performance there. But basically, middle of June we started to see a jump.
And it was totally not because farmers were necessarily in a buying mood, but I just think a swirl of factors that are kind of coming to a head here. So there haven't been hardly any new sales the past few years — they're very low. And that's been going on long enough now that it's beginning to have an effect because of what farm equipment dealers collectively did two years ago in 2024, which was the biggest dealer push of excess late-model large used iron to the auction market I've ever seen. And so they got rid of that stuff. You know, they didn't want to pay percent interest on it. They took a kind of a bloodbath moving it, trying to, quote-unquote, get ahead of it, and they kind of did. Now, that said, not every dealer did that. But collectively, Andrew, when I look at the back end of our MachineryPete.com website in terms of raw supply, units of used items for sale,
on the late-model side, it has really pinched down. So you combine that with farmers — I mean, the mindset is squarely on used equipment. It's very similar, I think, to what we see with consumers and automobiles. You know, you're thinking about, well, okay, maybe I'll trade my whatever. You go into the dealer and it's like, oh my god, it cost what? And so it's like, well, I'll just roll with what I got.
That's kind of been the same thing on the farm equipment side. But if you're a farmer, you do need reliable equipment. So if you're not buying new, you're going to be looking for the best used. And then, like I say, we already saw a jump in June, which historically is very unusual for auction prices to go noticeably higher in June and July. And then after crop tour, corn and beans went up, and it went up another notch and a half. So it's unusual. It's the only time in my 37 years, Andrew, I've seen a disconnect between noticeably rising auction prices and new sales. Every other time auction prices have shot up, new sales — it takes a little while, but not too long — they take off. They haven't yet, and I'm not feeling like they're going to in the short term either.
Why do you think that is? Is the gap just that much bigger now that people aren't willing to go out and buy new? Is that the reason?
Yep. I mean, we've kind of been moving at warp speed here. I guess it's just the way life is, nothing new there necessarily, but our pace has just picked up so much. So coming out of COVID, and there were real issues there — supply chain issues worldwide. I mean, there were reasons the price of everything went up, but they went up so much on the equipment side that it was getting to the point when it was — I always used to kind of think of it like a merry-go-round. It's like the whole market is going around, it's going around, the music's playing, it's like, well, these prices are getting awful high, but okay, we can work it. And it just felt like they got too high, and right at the moment on the grain side in particular it's been tough. So, you know, farmers do what they have to do and pull in the reins and tighten the belt.
And what's different this time, you have to stop and consider the world we live in. So when this happened in past cycles of my almost four decades doing this, we were kind of isolated. I mean, farm magazines or farm shows were how you got information. Of course, the internet began to change that, but social media now is to the point where, like it or don't — and it has many issues which are pulling us apart. But farmers talk to each other, and they watch what other farmers are saying. And from a data perspective, it was fascinating, Andrew. I could feel it when I go out to auctions — farmers referencing conversations online and kind of a collective mindset of just taking a breath and going, you know, man, we got a lot of iron on the farm here. Did my grandpa have that much? Did my dad have that much? And how much is this cost again?
So we saw two things. Farmers, on the one side, under financial stress, were beginning to have kind of downsizing auctions, and I had really never seen that as a force in the auction market until just the past year and a half here, two years maybe. Farmers — they're not quitting, but they just got so much iron, the banker or whatever, they're just selling stuff. But there's this conversation now of like it's the system, maybe the merry-go-round just stopped, the music stopped, prices are up here, they're not coming down,
when you want to trade something in, what you get for it, the gap is massive. We understand the pressures dealers are under, but the whole thing just kind of got out of whack, and that's kind of where we're at now. It's interesting because who knows if commodity prices will remain elevated. If they do, that's the key question to me: what will jar farmers out of this current mind space where, you know what, I'm just looking for a good used piece? Because the auction market is kind of the canary in the coal mine, and we're seeing prices lift.
And Andrew, every time I've seen auction prices go up summer into early fall, that's meant they've gone higher in November and December. And I'm not in the prediction business. I know there's industries now around predictive gambling. If I were a predictive gambler, I would bet the house on used farming equipment values rising in November and December. But still, it hasn't jarred loose the new sales yet. So, you know, how far can we go down this path? And what could eventually push people back to new is the fact that there just aren't as many one-, two-, three-year-old used units available because of the lack of new sales.
That's what my question was going to be then — is how does new equipment begin to move? What is the pressure point? Is it that used equipment becomes so much higher, or do equipment manufacturers look at it and say, we've got to change the game and how we're doing this because we just aren't moving new? How's it go? What happens?
Well, that's the game of chicken that we're actually just starting to tiptoe into, the game of chicken, and I think people are realizing it. On the manufacturer side, it was stated — it was a Deere exec doing an interview with Ty Morgan. It was a very good interview, but he said we can't lower prices because that would ding our customers' balance sheets on the used side. And there's validity to that. But at the same time, do you want to move new equipment? Because it's pretty apparent what's happening — farmers just aren't buying. And you can look at our auction prices. You don't have to like the auction prices or not; they're agnostic. They just are what they are. And there's one misconception, Andrew, that people think it's focused on just — well, tractors are going bonkers right now.
But I'm also seeing strengthening on the one-, two-, three-year-old stuff that is taking place because of the tightening supply. So this is a new situation that I haven't seen in my 30 — 37 years. In November I've been compiling this price data. So, yeah, I mean, if I'm right and auction prices do go higher in November and December, you're going to flip the calendar into '27 and new sales haven't taken off yet. It's just going to get tighter at the top end — the one-, two-, three-, four-year-old stuff. And so at some point, yeah, you'd begin to wonder what gives first. Do manufacturers lower the price a bit? Personally, I think it's — from any business standpoint, knowing your customers, in their head, in their heart, what they're feeling and what they're verbalizing — man, if you get disconnected from that, that is not a good place to be in whatever business you're in. And it kind of feels like a little disconnect out there right now.
I mean, shoot, my dad was a dealer, their generation. Farmers need their local dealers to be healthy, and dealers need their local farmers to be healthy. It's an ecosystem. And maybe it's — Andrew, maybe it's sort of like our society in general; it's just a little bit out of whack, and it happens. But what is it? What gets us back in whack and gets that merry-go-round to start to kind of, okay, here we go, start to go again? I don't know, but right now it ain't moving very good.
What are you hearing from the dealers that you work with? Are they concerned that they aren't moving enough new? How are they feeling about things?
Well, that's a good question. I mean, I had never heard collectively from our dealer partners and friends and contacts the verbiage we began to hear one to two years ago, which was, if you drill it down, it's like, hey, we're not worried about selling new now. Our focus is out on our used lot, because we're paying 8% interest on all that stuff. And this stuff, it's on our books. You know, it used to be on our books for 250 a pop; now it's on our books for 650 a pop. And also, we don't have two stores like the old days. We've got 48 stores, or 20, or 15, or 60, whatever. So the numbers are massive. So their focus was not on new at all. It was like, we got a used problem. Now, not every dealer has fixed it, but I will say that I've heard this from not one, not two, but a few dealers in the last two months saying, 'Pete, we wish we had more good used equipment.' They couch it and they say, 'I can't believe I'm saying this because of where we were two years ago.'
So in a way, you know, when I talk to Wall Street analysts and folks, they're trying to make sense of this. 'Pete, when are new sales going to take off?' And the reassuring message is that the whole space is beginning to function more efficiently. So it used to be — and you know, as a farmer, Andrew, it's so cyclical. You have pressures as a farmer when you have income and when you don't. I think one of the truths from my 37 years is that when money flows in agriculture, equipment is right at the top of the list of where the money flows. And so, you know, I think dealers collectively addressed the main problem, and now we're starting to think about the new side. But that used problem was so massive that it occupied their head and their heart.
And dealing with that was issue number one. And it was interesting: these dealers have gotten so big, Andrew, that they had exerted newfound leverage back towards the mothership, the manufacturers, two years ago, and they said, 'Hey, we'd love to sell new, but we got a problem here.' And the manufacturers, to a level I'd never seen before, worked with these larger dealer groups, whether it's financing or different financial levers they can push to help dealers. So that thing — that's good, and we don't have this huge overhang of one-, two-, three-year-old used equipment like we have in past downturns. Like if I go back to when commodity prices fell in the spring of '13 — I saw this overhang from the rest of '13, '14, '15 into '16. That's how long it took. You could argue even into '17, almost four years for dealers to begin to work out from under that excess one-, two-, three-year-old stuff. This time it took about a year. So that's a good thing holistically. But now you're still left with the price — farmers don't want to pay that for new equipment.
And the other verbiage I'm hearing, and it's getting louder frankly, is farmers wondering about the value of the tech given the price, because everything comes down to that price. How much does that cost? What's my return on those dollars? And that's why, you know, when I report just in the last three weeks of things like a John Deere 4450, September 24th, selling for 83,000 bucks, or the two highest 4440s I've seen in my 37 years were two days apart at the end of August — 155,000 and 91,300 — and they just smoked the highest. And this is when farmers are pinching. So it's kind of broken in terms of perceived value and price point of new, and it's doing things to used values that are fascinating. And again, I just haven't seen this before.
The time we've got left, I wanted to zero in on a few different categories. It is harvest season. Combines — is it traditionally a better time or worse time to trade here during harvest, right after harvest, way beyond harvest? What does the data say?
