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.
Hello and welcome to Moving Iron Podcast. Got Greg Machinery Pete Peterson on here to talk about what's happening in the marketplace. Also want to thank John Deere for being a sponsor for this edition of Moving Iron Podcast. Greg, how you doing?
I'm doing well today, Casey. How you doing?
Doing good, man. Doing real good. We've got, I guess, some different news that came out last week. We were talking a little bit about, you know, the Purdue farmer sentiment and how that looked like and what that meant for the marketplace, and we talked about how, you know, the auction prices were kind of a leading indicator as to where the market was headed and kind of what we saw happening there. As market prices started to come up, you start to see more farmers more interested in maybe what their equipment might be worth, maybe what that might mean as far as returns go, as far as trade-ins and stuff like that go.
But, you know, Farm Journal put out a survey they do every year kind of talking about, you know, what you plant, what brand did you plant, you know, you plant corn or soybeans, those kind of things, input cost, whatever else. They got down to the machinery and there was a marker on there that talked a little bit about, hey, you know, 50% of the people that took the survey said that, hey, if they were to take a look at equipment, it's on the list of things to upgrade. And that's a little bit different than what we saw the first half of the year. But like we've talked about since January, since we started doing this podcast, that the overall marketplace had been not — it's up year-over-year, but it's not up, you know, 10, 15, 20%. It's up 3 or 4%, but it's stabilizing. As things start to stabilize, more people start looking at maybe what the next move for me is when my equipment comes. So, I guess, Greg, as you take a look at that and some of the auctions that you saw so far this week, how is that lining up with that sentiment that you're seeing people talk about?
Well, the Farm Journal farmer survey is really interesting, Casey, and I know you were all over that. It makes sense to me because again, I think farmers, you know, the belts have been tightened here for quite a while now and understandably so. But what I've been seeing at auction again, you know, like you said, it's not fireworks and the pricing we were seeing in '20 and '21 at auction where frankly everything was a record price. But you know, given the current market, there's been strength since end of February in the auction market and I'm not saying it's all a bed of roses out there, but there's definite leveling off. And just last year the drop was so aggressive based on the volume at auction that as the volume of late model units has slowed at auction this year — and we'll yet to be determined the rest of the summer how that goes, but it's definitely way off pace of last year. So, the pricing we're seeing is solid.
And then if you drift into anything with a little age on it that's good condition, the pricing is actually almost going up. In fact, we had a sale as we're recording this. It was two days ago. It was out in New York. I believe kind of Western New York, Freley Auction Company had a farm sale. Now granted, it was unusual items. It's not every day you see a John Deere 6430 loader tractor with 278 actual one-owner hours on it. So, you know, it's going to be high, right? And loader tractors, that segment's been stronger anyway. But $128,000, you know, 5k over the record. And then right next to it was an '03 7420 loader tractor with 1,522 hours that went for $122,500 and that was $18,000 over the record. So again, pretty deaf — like new. You got gold if you got something like that right now.
But even today as we're recording, I was watching, I'm sure you were too, some of these auction prices. I know Van Wall Equipment had a little online offering, about 50 items through Sullivan and Big Iron. And a couple items that caught my eye, they had a pair of 20-model 9620 RXs. I think hour-wise, one at 1,115 hours brought $348,000. One, 1,623 hours went for $341,750. And again, so $340 range when the average on a 9620RX now this year is $295,500. That's, you know, you'd expect average on something like that not going to go up. So, but it's only down 6.5%. When last year the average auction price on a 9620 RX, I mean, it fell 25.6%. Went from like $426 down to $317 last year. So again, there just haven't been as many out there. And so the pricing's been again just a little more solid.
Yep. And that's kind of what you see this time of year, right? You see that there's a limited offering, you know, you don't see the whole smorgasbord of big, you know, like this time. Take a look at like November timeframe, right? You'll probably see three times as many of those tractors out there for sale just because that's the time of year that you're seeing. But the right thing about this time of the year is it sets the tone for what the end of the year is going to look like, right? If this time of the year is bad, it's worse at the end of the year, right? When this time of the year is good, it's typically a little bit better than it was this time of the year. So those dichotomies that you see — to me, this is the time of year that sets the tone for what happens at the end of the year, right? If we're seeing — look at last year, what have you.
You're completely right. Last year, June and July was like, whoa, there was blood in the water. And that's — it's a tricky time if you're a farmer. You know, times are tight anyway, and you're sitting there going, 'Well, I kind of don't want to spend anything, but if I did, I would upgrade this or that.' But when prices are kind of, you know, 25.6% drop, you're like, 'Well, people shouldn't wait. Is it going to drop another 25.6%?' And frankly in '14 and '15, that's what I reported then is we saw two, two and a half years where they dropped 20 to 25%. But this time it's — right now anyway, it's looking like we had one year and two for combines, but one for tractors where it just dropped off a cliff. But now we're kind of — so far first half of the year kind of normal depreciation rates. So, it's been, you know, like I said before, it's surprised me a little bit.
Yep. Yeah. It's a different marketplace than it was this time last year for sure. Talking — it's not gangbusters by any means, right? But you're seeing a leveling out and that's the first step to rebound in the marketplace. And we've been putting in that bottom throughout the entire year, right? And here we are sitting here looking at fairly decent prices out there comparatively speaking, right? Relatively speaking to what we've seen in the past, right? You've seen good solid pricing come in there that is not, you know, down 20% one day up all the — you know, all the volatility that we've seen in the marketplace is starting to really contract down nicely.
Yeah. And again, what's really jumped in our auction data is again if it has just a little age on it. And I was reading the paper with lunch today, my turkey sandwich thanks to Mrs. Pete having a nice turkey deli in the fridge for me. So I'm making the sandwich, I'm reading through the biz section. And I see a report from Edmunds, of course, you know, like one of the sources with Kelley Blue Book on the used vehicle, and I'm not really a vehicle guy, although we do compile prices on cars in our machined.com website. But I found it interesting, Casey, it's Edmunds came out and said the average used vehicle price is up 2.3% first half of '25 here. And it was getting into the reasons and I think it mirrored very closely what you and I have been talking about for a couple months now that, you know, the supply situation of late model used on the dealer lot versus maybe a year ago. It's not fixed, but it's just better.
And then there's if you flip it and, okay, who's looking to buy a car? Well, they're like farmers. They're under pressure and now they're trying to judge this tariff stuff. My 401k, it dropped like a rock, bounced back up, but I'm still kind of worried about it. Job losses maybe starting to mount. So basically people are pulling back like farmers have been pulling back, and when you pull back you hold on to your existing, in this case, vehicle longer. So the Edmunds piece said the average age of everyone's vehicle right now is 7.6 years and a year ago was 7.3. So, it talked about the competition for really good used cars on the lot. And what I found interesting, Casey, curious to get your take, but it then flipped and talked about from the dealer mentality.
So, dealers, the time on the lot was not high velocity, but the used car dealers were getting cooler with holding because they were just waiting for the right buyer to come for that used whatever Bronco or whatever you have, realizing that the price of new is going up and you might not have the availability of new with tariffs and whatnot. So, they're kind of feeling like, you know, like they don't have to shove it out the door to auction. Maybe I'll just hold on this and maybe it'll — it's working out better. So, I don't know what your take is, but, you know, it's a weird marketplace you look at.
So, I've been looking for a wife — my car — been looking for — I found a wife, but I'm looking for a vehicle for my wife for some time now. And again, not in a big hurry, right? You know, the one we have, I don't owe anybody anything on it. So I'm not in a big hurry to get rid of it, right? But it's one of those things where you kind of watch what's going on there. And the crazy thing I see about in the used marketplace on cars and especially on the new side is that price of a new car is ridiculous, right? It's, you know, you're going to spend — you want an SUV of any kind and you're going to spend 65 to on up, right? You're $90,000 bucks in some cases, right? But a lot of those things, they have interest — the interest rates they have are, you know, subsidized from the manufacturer, you know, 1.9%, 2.5%, 2.9%, 3%, those kind of things.
And you're looking at a one-year-old car that's got 30,000 miles on it or whatever and it's barely off the price of a new one, you know, for the hours or the miles that you see. And you're going to pay roughly, you know, 5 to 7% interest depending on, you know, where you're at on that curve. And typically when you see that happen, you know, the programming of new is always, you know, on the A side and everything else. Programming new has a great effect on used, right? And it's all about how that dollars play into those kind of things and the same thing. But it doesn't feel like it's that there on cars, right? You don't — it doesn't feel like how programming is affecting that because I think what you just said makes a lot of sense. The payment structure that you can come into might be $200 cheaper even though because of what it is and interest rates and those kind of things, but it just — it's $200 less than the new one. So, I'm going to get this used one over here.
And I think to your point, tariff prices have really done some amazing things to the price of cars. And hopefully that goes away sooner than later. But the thing about that is whatever that car is sitting on a lot for today, that price doesn't come down if tariffs go away, right? That's the thing that is there. Like that's a static number that's there forever. It's like that's there, right? If the tariffs come off tomorrow and the price of the car is now $10,000 cheaper, something like that, and the new one comes in, I sure hope those dealerships have those cars, those new cars that are higher price off the lot faster than the ones are going to come in that are less price because again, that's the same thing you see on the used equipment side of the business, right? When that market starts to shift, you've already got that number in here. If the market goes down and that comes in, you're there. But, you know, that's a tough place to be, isn't it?
You're having that happening. You know, the other thing I found interesting on the vehicle side is the — you know, kind of you say the word engineering, you know, it always — we think of it, you know, making stuff, right? But financial engineering and how our things have changed in our culture. So now it was talking about the number of people that have stretched out to take, you know, seven-year vehicle loans. And I'm pushing 60 years here. So, if you'd have set a seven — an 84-month loan back when I was, you know, didn't have two nickels together and was trying to, you know, fit a payment into our budget, it was like, we just knew even from the limited financial advice we had from our stoic Norwegian parents, it's like, ah, I don't want to tie myself to 84 months. But the costs have got so high, whether it's a combine or that SUV you talked about or a pontoon up here in Minnesota. I mean, it's crazy what the new stuff costs. And people have got comfortable with like, well, okay, as long as my payment is X.
And that's for young listeners of Moving Iron Podcast, old gray hair machinery Pete's going to say, you got to be willing to swim against what everybody else is doing. Just because everyone else is doing a seven-year loan, don't be cool with that, in my opinion. But anyway, it's interesting to me how much it's changed over really not that long a time.
Yeah. Well, that goes back to when you see the same thing on the farm equipment side right now. There you're seeing seven-year notes out there, 84-month things, and I've even seen some programs that were 10-year notes. I mean, so it's just depending on where you're at, you know. But really what it comes down to when — and I think what's important to talk to people about on that is that you have to understand that your equity position on that really dictates how you come out on that deal, right? I've always had — every car that I've ever owned or anything I've ever bought, I'm always trying to stay ahead of the equity curve, right? So that wherever I'm at, whenever I make that payment, whatever it is, I'm somewhere in the range of the Kelley Blue Book deal that says, 'All right, cool. Your car is worth X and you owe X, so you're in a good spot, right?'
That's the same thing on the equipment side of the business. When you're looking at the equipment that's sitting on the lot or they're sitting in your shed, there's always two things fighting against you, right? Depreciation, interest. Those two things are always fighting against you. Now, both of those have been amplified, right? To where you have higher interest and higher depreciation cost as those come in. So, speed and velocity of which you're trying to get rid of those has such an impact on what that machine looks like when you buy it. So, it's the equity positions that you're in. And I feel like we're seeing some of that equity that we've seen deteriorate since COVID is starting to solidify up a little bit. So you start seeing some equity slowly be built back up because of the rate of depreciation is so much slower than it's been.
The flip side of that too is the speed of which the interest rate cuts into your payment, which then, you know, cuts into your equity. That's another side of that too. That's a big deal. So, those two things when you start looking at velocity and speed of what you're getting stuff in and out, whether it's your barn or the lot, the dealer's lot, whatever that is that you're looking through, your machine shed or the dealer's lot, those things all have the same equal impact that everything else does too, right? So, it's, you know, just there's not just depreciation on the dealer lot, there's also depreciation inside your machine shed. There's not just interest costs at the dealer lot, there's also interest cost inside your machine shed. So when you're thinking about what you're going to do for '26, that needs to come into your synopsis somehow of how you figure what you're doing.
And back to what you led with, the Farm Journal survey, now you've seen an increase since the start of the year about people verbalizing that in '26 they plan to make some equipment purchases maybe that they've put off. So yeah, it's fascinating. This all stuff is all connected.
You know, one other thing on that Edmunds story that I read that I found interesting was talking about the number of people and, you know, probably just having to, but rolling their current debt or underwaterness into the new loan, right? Which again, like you said, you're — again, young listeners, listen to what Casey said. You don't — try not to get in that position if you can. But even as we see the market solidifying with used equipment values, you know, I am aware that there — you know, we've talked about it, the lending pressure is sort of a tale of haves and have-nots, you know, unfortunately. But I've been hit upside the head a number of times recently from farmers, you know, sharing their reality of the difficult situation they're in with their lenders. So, no, it depends. Do you own the land? How much is it paid for and all that stuff.
But it's, you know, again, as you're able, as you build through your career, trying to position yourself with dry powder financially so that when land — I mean, land values haven't dipped, you know, for a long time. Maybe it felt like machinery values weren't dipping there for a while, but now last year they did. So, you know, when it's right and again, like we talked about on the used machinery side, you know, I think people were talking about maybe '26, you know, not to speed up your checkbook play, but, you know, possibly mid-'25, summer '25 might not be a bad time to be aggressive. So, we'll see.
Yep. Changing market. We're coming out of a downturn in the sense that we've leveled out, but it's that time of the year where we're setting the tone, right? We're setting what the rest of year looks like. And what it feels like now is kind of about in line with what we've talked about on here so far this year. So fingers crossed more positive than last — a year ago if we were having these conversations. There was — there was — well, you know, fear from the dealer side, genuine fear, and it's just — it's not fixed, but it's just a different reality we're in right now.
Yep. For sure. For sure. Last thing, Greg, I've been thinking about this a lot with the online auction mix that we've seen so far. I mean, obviously there's dealer retirement-only, auction-only auction that we're seeing being online and we're seeing a mix of consignment stuff and those kind of things. As you look at this new normal at the auction stuff, the thing I've been really thinking a lot about was where does the retirement sale, estate sale, dealership consignment sale, you know, yearly consignment sale that you see some of these auction companies have as these things kind of start to blend together because of — obviously there's, you know, Joe Smith's retiring, so he has a retirement sale and it's online now and those kind of things. But, you know, you go to like — don't pick on Big Iron here. You go to Big Iron and you'll see ABC Implement having something for sale and Joe Smith Farms has got something in there and then there's just some hodgepodge of things from all over the place.
So, the blending of the true kind of the three big ones that we used to talk about all the time, it feels like they're blending together. What's your thought on that? And have you thought much about that?
Thought about it a ton, Casey. And that goes back to when I started before the internet was going in the books, auction price books we used to publish. We, you know, so this is 1989 and I was 23 years old. But we had a column in each book. So we'd tell you the price, you know, the hours, date it sold, and then one column was sale type. So back then it was consignment, dealer, or farm sale. And then within farm sales, you've got your estate and your retirement, which those were like the primo A++, right? In terms of selling. And they just carried their own like assumptions. Casey Seymour farm retirement sale. You know, locally, everybody knows you. You take good care of your stuff, you're going to get a Casey premium because everyone knows Casey. So, it's been blurred. No question.
I think the — I love, you know, and we see everything. Auction companies, you know, hit it a zillion different ways. I like what Big Iron does and other outfits like that when they have, you know, maybe a sale with 20 items from a farmer, you know, doing a good job about fencing those items and making sure these are — Casey's retiring, Casey farmed for X number of years and, you know, getting into some specifics there, hopefully an interview with the seller. So then it's a farm sale within the online huge event. But again, the reason I had all those on every piece of equipment reported on the sale type was because frankly the data used to show that farm auctions were the highest and then came dealer auctions and then came consignment auctions.
But the consignment auctions prices varied on basically the reputation of the auction company, right? You know, how are they perceived by people? Now, it used to be pretty local. You know, we cover every state in all states in Canada. And again, every auction company's different. I think these days, even more so than ever, it's super important, Casey, you know, for auctioneers and on the dealer side selling used equipment, just be super, super upfront and honest. And again, don't look at it like, hey, you know, you're excited to have a potential buyer from five states away, but if the piece of equipment has issues, boy, you — I mean, for the sake of your business going forward, you really got to call that out. And I mean, we all make mistakes, but just as honest as you can say when that person calls.
And if you're a buyer, I always used to advise before the online thing took off, I always advised calling the seller. So, if it's a farm auction, get the farmer — you know, not — and call the auctioneer, yes, but get the farmer, seller, or same on the dealer side. And just try to keep the person on the phone for a while, like start talking about the Vikings or the Packers or the Cornhuskers or whatever, and then drift into the equipment. But the longer you kept them on the line, you were going to get a gut feel, something they said. And I think what people were looking for was honesty and particularly about, you know, an issue a piece of equipment might have.
And to me, I always thought it's almost — sounds weird, but if I were a dealer or an auction company selling a piece with an issue, this is my biggest chance to set myself apart from others because I'm just going to be super out front and say, you know, if I'm a dealer, I'm going to price it accordingly. But yeah, I'm going to tell you what's wrong with it and I'm going to, you know, just be — I'm going to do a video and tell you what's wrong with it. And the same opportunity on the auction side. Again, don't blow any smoke because you blow that smoke, hey, it's sold for more than I thought. Well, that boomerang hurts like hell when it hits you in the back of the head, right? And that's the problem. So, anyway, that's my advice.
It's good advice. All right, Greg, it's probably a good place to stop. Stay tuned for more Moving Iron Podcast after these.
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Hello and welcome to Moving Iron Podcast. I have Sean Hackett with Hackett Financial out of Boca Raton, Florida on here to talk about what's going on in the world of commodities. Sean, how you doing this morning?
Had a great Father's Day and hope all the fathers listening had the same.
So, yep. Had a good one myself. Just hung out and which is the easiest, the funnest ones to do where I only had to fix one thing. So, it was a pretty good Father's Day.
Well, Sean, we're watching, you know, the price of corn here had a — took a run yesterday down and we saw some things happen there. Down below the 440 mark. And I guess, Sean, as you're looking at the marketplace, we saw a couple things happen Friday. We had new mandates for renewable diesel, what that looks like. We also have the Iran-Israel situation. It's not necessarily escalating, but it's still there and you see some draw in the market there. So, I guess, Sean, as you're looking at the market right now, I guess talk to me a little bit about what you see happen.
Well, always with a geopolitical situation, is it an event and it just fades away, which is what normally happens, or is it something that's more sustainable escalating and becomes more of a global protracted issue? And of course, we've, you know, we've seen crude oil go from $54 a barrel and we're trading, you know, we've been trading north of 70. So, that's quite a move in a very short period of time. And so if higher energy prices were to persist, you know, that would reverberate into inflation, into hard assets, into cost of production. And it's always been — that's always been a bullish underpinning for agricultural commodities. Fertilizer prices took off on this escalation of war as well because of the nature of proximity to Russia and that sort of thing.
You know, word today is, you know, Trump is still trying to work something out. I don't think, you know, I don't think that's going to be a driver unless we — unless Trump says deal is not happening and we're going to, you know, this — we're going to go into it. We're going to get more involved. I think if the US says that the US is going to get involved, that's when the markets start to react on a more longer term basis. Well, right now we're still the observer watching things happen, but we have yet to say that we're going to actually get involved and take a leading role.
The renewable mandate was very significant, higher than many had been expecting to see. It now means more demand for soybean oil, more demand for bean crush. It means those 280 million bushel of carryouts that the USDA says we're going to have next summer could be considerably lower. If the bean crush is underestimated, we're going to need to draw millions of acres more into soybeans versus corn and cotton and rice and such. And so the soybean market between now and next spring has to determine what's the right price to get those acres. And of course, if you deprive those acres from corn and cotton and rice and such, it tightens everything else up. So it's a longer term issue.
Short term, however, we need Mother Nature to tell the market that the trend line yield that the market right now feels is in the bag may not happen. And we're not getting that signal yet. Everything still looks pretty good, getting timely rains, not a lot of heat. And so that's where we're at. I do believe and continue to believe that we're going to be looking at a change to a warmer, drier pattern at the end of the month, past the Fourth of July weekend, and I think it could persist through early August. I don't think it's going to be hot enough to create a major crop problem, but I do believe it'll be dry enough and hot enough for long enough where it counts to take a few bushels off from trend, and that's all you would need.
I mean, if you get a 178 yield like we did last year, Casey, your 1.75 billion bushel carryouts could become 1.3 to 1.5 very easily. And not that — that does not mean we're running out of corn, but, you know, that's not a sub-$4 corn market. We already showed that last year, you know, we were able to run the market up to north of five with those kind of carryouts. So my view is that we had an opportunity earlier in the year to get old crop tidied up and get, you know, most of that sold, which we recommended, you know, on a cash basis, and we're looking for some kind of a counter-seasonal mid-late July peak or rally into that peak based upon weather to start moving and start pricing some of this new crop corn.
Also remember something, however, that we are expecting a very, very cold, wet harvest with potential for a late September freeze, which would mean a lot of crops in the north may not reach full maturity. So not only is it going to be slow to get the crop out, we're going to have some quality issues, some fungus, disease issues that also take a little off the top. But that could create quite a post-harvest rally if you had something like that really take place. That could be your second opportunity to get some new crops sold. So we think between some type of a mid-late July high and some type of, let's say, late October to late November post-harvest rally high, there should be some good, better opportunities than today to get some — to get moving on your new crop cash pricing.
Right on. Okay, let's bounce over and talk a little bit about what you see happening in cotton. So, I know that's been on the minds of a lot of folks in the south. I guess, as you're looking at the cotton market, what do you see happen right now?
We're going to get this acres report here at the end of the month. You know, because we have the planting intentions at the end of March that said what we think everyone's going to plant. Then we come out with June with the USDA saying pretty much what they planted or pretty close to it. And I don't think they got everything planted in cotton. It was too cold, too wet, too long in the deep south and southeast. And I just don't think all those acres got in the ground. So I'm expecting to see that never come down. And that should be a support for the marketplace.
And additionally, you know, cotton is a hot weather crop. Like it likes warm weather. It thrives in a drier, hotter kind of a growing climate. That's why they plant it in Texas because it kind of doesn't need a whole lot of rain. It just — it can withstand a lot of heat and dryness and still produce a decent amount. Cold and wet though is not what cotton wants to see. And we've had a lot of cold, wet weather that it's just not likely going to produce the quantity or the quality that the US typically expects and anticipates.
So, you know, now and of course, supposedly we have this trade deal that we shook hands on between Trump and Xi a week ago or so. And we don't know the details, but apparently they're going to hash out those details and sign a formal agreement here in the weeks to come. My anticipation would be that we're going to see some minimum purchase price — purchase levels or quantities for cotton and corn and soybeans. Nothing like what we saw in 2019. I'm not looking for a big bang kind of thing, but I do think that they're going to set some levels that are substantially above what we've been seeing in the last 18 months.
And in cotton's case, shave off a little production, increase a little demand from China on a trade deal, and all of a sudden those ending stocks that we have would very quickly move to an uncomfortably tight spot. That's what we think the likely scenario is from now heading into late July, August is the combination of those two factors creating a much
tighter market. Not expecting anything crazy, but we've been stuck, Casey, as you know, in this 65 cents to 68 cents sideways, sideways, sideways, sideways. I mean, just for doing nothing forever. And we think we can make a pop in the mid-upper 70-cent range on the December contract, based upon what I just mentioned, that potentially could give the producers an opportunity to sell a price that, while not fantastic, that price will pencil out. They can pay their bills and they can farm next year and grow more cotton. So that's what we're expecting to see, and that's what we're hoping we can get, and hopefully make that recommendation to those cotton producers we work with that watch your show.
Right on. Let's talk about the proteins real quick. When you're looking at cattle and hogs right now, what are you seeing happen there?
We went back 60 years and said, why do cattle prices make a high? What were the conditions that they made a major high? The majority of them all occurred the year that herd rebuilding began, and they occurred typically in the third quarter of the year that herd rebuilding began. And then we also looked at all the rallies that occurred in the past due to disease issues, whether domestically or internationally, and we've seen this in the dairy industry last year with avian flu and African swine fever in the hog market. There's a fuse. And what we've learned about animal disease is that the fuse is about six months. You just can't trade a disease fundamental longer than six months before the market just moves on. And if you look how long we've been trading screwworm out of Mexico already, and you look at where we are with herd rebuilding, third quarter is coming up here. We really feel that this final surge we've seen in the cattle price, on the combination of the export ban or import ban from Mexico on screwworm and on clear signs of a tighter animal supply from herd rebuilding, is setting up this final push to make the final high during this historic bull market that we've had in cattle for the last several years. And so it could happen any time, but certainly what we would anticipate over the next one to three months to see, if history is any guide, a final top in this market. And we would really encourage cattle producers to take full advantage of finding as many possible ways to lock in long-term cattle equities they can in their business, because we know there's going to be times, as always is, where the cattle industry is not very profitable, and it can be years that it's not profitable. And we just want to make sure that if and when those times come back, that there was enough profit booked during these times to weather the next trough that's inevitably part of our commodities.
In terms of the hog industry, what's bad for cattle is good for hogs. You know, we've seen the consumer sentiment index just crash over the last several months because of the tariff war and economic worries, and we're starting to see demand for beef really start to show clear signs of pulling back. Now, the price is still going up because the supply is falling faster than the demand. But we're seeing for the first time this final, finally seeing a rotation to more pork demand, to more pork options. The consumer finally saying, you know, we got to, we got to downgrade to a more affordable pork protein versus beef protein, at least for now. And if you looked at since early April, the hog prices outperformed the cattle price by a fair margin for the first time. It's years since we've seen hog prices gain, and that's because of the demand switch that we're starting to see. You look back at the cattle to hog ratio over 20, 30, 40, 50 years. Anytime we've seen the cattle price get this overvalued relative to the hog price, within two years to three years' time, we've seen that price ratio get back into par, where the hog price and the cattle price are trading actually fairly similarly in terms of price per pound. We would expect and anticipate between cattle prices coming down and hog prices going up because of this grand switch we're seeing, that we will see those two markets normalize again. So we think this is a pretty important switch, rotation, that finally the economics are winning out. This price distortion is winning out. High prices. The best thing for high prices is high prices, and such forth. And eventually value is rewarded, and expensive valuation is damaged. And we think we're at that, we think we've crossed that important inflection point for both. So we're pretty optimistic hogs are going to have a good run, good period of profitability after just a brutal period we've seen, and cattle is going to get into a more challenging period after an incredibly prosperous couple of years that they've had. And that's just the, that's the ebb and flow of how agriculture and the different industries go through. There's always times that you're profitable, and there's always times that you're not, and you're just trying to make sure you manage that risk to your best ability so that the trough isn't too bad, and that you've made enough money during the good times to weather the storm.
Right on. Okay. Well, Sean, good stuff as usual. Folks want to reach you, reach out to you and get more information about what you're doing over at Hackett Financial. What's the easiest way to do that?
hackettadvisors.com. Hackett Advisors with an S dot com. Also, Twitter page is @seanhackett. From time to time, I put some stuff on there about our interviews or things that we talk about about agriculture, how we make price forecasts, our weather outlooks, so that those that have an interest in how we do things, this type of information might be of value to those that are listening and watching your show.
Right on. Well, Sean, I appreciate you being on the podcast. We'll catch you again next time.
Look forward to it, Casey. Thanks.
Stay tuned for more Moving Iron Podcast after these messages.
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All right, welcome back to Moving Iron Podcast. Casey Seymour here, talking about what's happening in the world of equipment. You are the CEO of High Plains, what is it? High Plains Wholesale. Chief Entertainment Officer of... Yeah, I was going to say, be careful. Make sure that you fully describe what those initials are. Chief Entertainment Officer, not the normal use of those letters. Chief Entertainment Officer there. You see him on Facebook all over the place putting out his deals of the week and whatnot. And pretty entertaining stuff there. You got a lot of stuff happening, man. There's quite a few. I watched one the other day. You had an air seeder that you had on there.
Yep. Yep. We got a little, try to put a little of everything. This peak behind the curtain will be a heavy focus on harvesting hay with the seasonality of it and whatnot, you know. So, yep. Stay tuned for more.
Yeah, you saw a lot more balers in this time of the year than you do, I don't know, typically the dead of winter. There's, you don't, there has yet to be that.
And you got to keep in mind our baler business by and large is the rancher. The guy putting up the bale is the guy who feeds the bale. We do have a little bit of commercial in rounds, but typically commercial hay in this part of the world, 3x4s and 4x4s.
Yeah, big squares. Put them on a truck, haul them. It's just how life is.
So we have yet to have that.
Well, it's November. We really should go to town and get that new baler ordered.
Yeah. Right. Yeah. Not like, make sure you're here June 5th and we'll get that new planter hammered out, right?
Yeah, very different world.
Yeah, totally. Yeah. It's funny. You know, you look at balers, for what they cost, you know, I mean, I looked at a new baler the other day and it was 75,000 bucks, you know, right? Which, if you, it's like anything else, when you haven't looked at one for a while and you kind of start just kind of dinking around a little bit and you start seeing like, what's, you know, what's a one-year-old with 5,000 bales, you know? What's that, what's that look like? You know, and you're seeing like 65,000 bucks and I'm like, 'Well, God bless. How much does the new one cost?' You go out there and look at the new one, you're like, 'Oh, okay. I guess I see why this was 65,000 now, right?'
Well, think about it. You know, I realize everything's gotten so crazy. A row-crop tractor almost doubled in price in five years.
Mm-hmm. Balers were like 50, right? Throw a dart at a board, doesn't matter the brand, the new baler's 50. And that was like for a decade, right? Like they started at 498 and ended at 535. Like that was your decade of baler movement, right? Turn the page, right? Boom. Like, wow. What do they all do? Oh, it's the same. Yeah, pretty much the same baler, but oh, that one shaft is bigger and so is that chain. Yep. It's just, it costs more to build. Sorry. Just the world that we live in.
But it's still amazing that the price of a baler the way they are, it's still kind of the impulse item of the equipment world. You know, really think about it, because it's, don't get me wrong, people are definitely planning new baler purchases and MoCos and those kind of things into their budget for the year. But you still get the guy that shows up the day before first cutting and said, 'All right, what do you guys got for balers that are ready to go?' You know, you know what I mean? And so you're like, 'Oh, well, we've got this new one we just set up and then we've got, you know, these used ones over here that need X, Y, and Z, and you know, it's going to be a bit.' 'Well, I need it this week if you can get it,' you know, type of thing. And so it's not, you know, a lot of impulse buys for balers are catastrophic failures, right? Um, that's where that caught on fire or there's some, you know, major issue itself.
Yeah. You know, did something crazy on the inside of it. Um, two of those rollers are inside that bale. Try that. That's a cool trick. But you see how that plays out. So it's funny to watch how the baler market is, for as much as it's evolved, as it's stayed the same.
Yeah. And you know, one thing, it's an impulse buy at all levels, right? I am the bottom level of the hay man. Yep. And the first thing that happens when that baler breaks down and I can't walk through it on the phone how to fix it because I'm a long ways from a store, I start looking for another baler.
Yep. Because you get to that point where you fall under like that 15,000 mark on balers.
Oh my God, there's just hundreds of them.
Yeah. Yeah, you get under, you know, say under that $20,000 threshold, and whether that's too much for my caliber, but you get up to the middle of the alphabet on up level of buyer, and we got to go. We'll get that baler. Let's roll.
Yeah. You know, and maybe this one will last just long enough and then that one's fixed and we hook back up to that one and they spruce this one up. Then we bring out another tractor. Then hold on to your hat because now we're rolling with two.
That's right. Yeah. And that is how, man, I would say 80% of places end up with more than one baler.
Yeah. Unless they're, you know, that big that from the start, hey, here we go, you know.
Right. Yeah. Yeah. You start looking at like hay rakes and those kind of things. That's the most impulse of impulse buys that are out there because typically my running joke with that kind of stuff is if someone's trading one of those in, they've, it's used up or they've bounced it off of, you know, the bridge for the eighth time, you know, and now they got to, you know, this telephone pole is about to fall over because it's been hit so many times by the hay rake type of thing, you know, or stuff is very impulse.
Here's a good one for you. As my father would say, an end user. I've gotten rakes that have eight tires. You know, a lot of rakes have eight tires plus. Mm-hmm. All eight tires wear very different. It's that cheap.
Yeah. You know, but the beauty of it, what makes a rake an impulse buy? I mean, they just don't cost that much, right? You know, so it's, and things is pennies, you know, right? If you're a hay operation of any kind of scale, they're damn near a disposable item.
Yeah. You know, there's just nothing to them for them to last and hold up for nobody's got it. Well, we've had this rake for 25 years.
