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 back to the Moving Iron Podcast. Clinton Griffith here with Casey Seymour as always. Casey, another busy week out there in farm country. Some headlines that I think are going to catch some people's attention this week, which, you know, I have the opportunity, I think maybe to put a little more wind back underneath the sails of some of this machinery and equipment market.
Yeah, I think so. I mean, look at some of the stuff out there. You know, China's ports unknown, right? It always goes to China. So there's like 10 of those cargoes out there that are showing that China bought some beans this week. And you're looking at this fuel, this eight billion dollar fuel allowance thing that's being kicked around for the American farmers. What that might do for them. So there's a few things out there that are kind of important towards that. The nearby months, you know, you look at where they're at and look at the futures out there long-term, you're seeing some better technical moves from that stuff. So it shows you that, you know, there's some nearby stuff we're trying to work our way through, but I really believe this is me talking right here. So I'm looking at what the USDA says and how the market reacts to that. You're seeing some things there, but long-term wise, and we start thinking about it really starting to point towards, hey, we really want to make sure we plant about another 100 million bushels of corn this year, right? And keep those things where we're at. So we're going to make sure that there's a little carrot out there for you guys to go out and do that. So, you know, we were talking before we got started too, like where the price of soybean was this time last year, where it is today, right? And it's better, but little things like the, you know, fuel, I guess that's not really that little of a thing, but those kind of things stuck in the way and kind of curb, you know, kind of slow down a little bit. But I can honestly say this with the rollbacks that we've seen on the price of corn over the last four or five weeks, where we're at today, it hasn't really stopped a lot of people's kicking tires and looking around and getting quotes and speculating on where they're going to be at the end of the year and what kind of purchases they're going to be ready to make. So, yeah, seems like things are cornering in a good direction.
Well, and I think as we talk about kind of big picture here, I think what are we like, we're about half, we're not even to the halfway mark for hitting harvest, corn harvest specifically here, about 8% behind the five-year average, sitting around 44%. So, you know, we still have a ways to go on this harvest season. I think folks are obviously out in fields right now. I've spent some time in northern Iowa, you know, and you have to be careful because you get the, you know, that backyard-itis of, you know, how my crop looks is how the whole crop looks. But the gentleman I was there with and doing a story on, he was pretty clear in saying that like, hey, I know 10 miles from me, I know 12 miles from me, they had issues this year. He kind of caught a sweet spot. And so, you know, there's going to be pockets out there. You had really good crop. But I think big picture here is we're trying to figure out with, you know, the high input cost we had at the start of the year, the number of acres that went in, and then the challenges we had with some of those missing ears and we found it on crop tour, you know, what is really the size of this crop as we bring it in into the bin? And there are questions, there's still questions that, you know, some members of the team here like Chip Flory and Ty Morgan are trying to ask about, you know, what were these counts that we got in the last USDA report? Are they, especially out of Nebraska, are they exactly what we need in order to get accurate counts? And so there's all of that speculation happening at the same time that we're, you know, we're just trying to get an arm around how big or small or what size is this crop really.
Um, and we may not know for a couple of months, but I think you're right in saying we're finally bringing in some cargoes and selling some cargoes to China. They're back in the market in, I mean, a pretty decent way, really. We've got this threat of El Nino, even though planting is going pretty good in South America, but there's always this, you know, when you get an El Nino season, there's this big threat of either flooding out half of South America or drying out the other half, and that could start to spell some real challenges. You know, Australia is another one to watch in terms of grain production, especially in an El Nino year, but we're not going to know that for a couple more months here. One thing we do know is that ARC PLC payments are coming out, and then we got a little reprieve here, the president announcing $8 billion, as you mentioned, to help cover a gas card, fuel cost. You know, and it's, listen, they're just going to send you the money, like it's not going to be one of these things where you're trying to negotiate for how much you spent or didn't spend. So you know how much that money is going to come into play, but it'll be here before the end of the year, Casey. And so I think you're right, like there's probably some interest in saying, okay, if I'm going to have some of these things by the end of the year, I'm going to start thinking about it. And you know, we're getting into that. I mean, we're on our way to the start of November when it's going to be crunch time to start making some of those decisions.
Yeah. And you know, other thing too, we got, you know, this farm bill rumblings, you know, and trying to get that thing pushed through. What's that look like and how's that going to affect our things moving forward? Because, you know, this is the 11th year or whatever without a farm bill, you know what I mean? So, you know, so it's expected to be, what's it, the end of October that when it runs out, you know? So that there's a whole thing there. So I mean, there's a lot of things out there that are just kind of hanging out there that could really push things over the edge. And I'm looking at it from the standpoint of I think it feels like to me as you work your way through all this stuff, it really means I know I've got a farm next year and here's what I need to do to be ready for that. And then you're starting to see guys step back away from the noise and start really taking a hard look at what they've got and say, 'Hey, I've ran this combine for this many years,' or 'Hey, I've ran this tractor for this many hours and I've done these things to them,' or whatever it is they're doing. And really getting their arms around what is it that I need to be successful next year? What's it look like? And starting to go down those paths. And I just, I can just tell you that from my experience so far and what I've seen happen in the past coming out of down cycles like this, this is lining up very well to have similar looks and feels of other scenarios that we've seen out there. And we continue to watch auction values and you're seeing, you know, record auction prices on these things across the board. Start looking at the number of machines that are out in the marketplace and how that number has shrunk to where it's at today. Not that it's shrunk by leaps and bounds by any means, but it's less than it was this time last year, right? So there's a lot of things like that going on. So I think, I don't know, everything's pointing towards a little better sentiment, a little better look and feel to what success looks like in 27, I guess.
If I want to manage some of my fleet this year, Casey, let's say I either need to sell something or I want to sell it and then trade it, or trade that capital for something else. Like, how do I, what do you advise people to start thinking about how to do that? Like, what are some of the steps that they need to be putting in place to get ready to do that? You know, do you need to show up at that machine with some maintenance? Is it about knowing what you're looking for? So knowing what it's worth, that kind of thing.
I think it's kind of a little bit of that, you know, but I think there's two facets to when you're looking at equipment, right? So one is what do I feel comfortable with buying, right? So, and also understanding what it is. If you haven't been in the market for five years, there's plenty of people that haven't been in the market for five years, and you go and you show up, you're like, 'Holy crap, what happened?' You know, like this is so much more expensive than I anticipated. Right. So, I mean, that's one thing, trying to understand truly where the marketplace is at, where your machine stacks up, those kind of things. Auction values, retail values, look at those and trying to kind of figure out what that looks like. But I think you have to understand what it is that you're wanting to do, right? I mean, there's two ways of looking at this game. One is I want to run my equipment for the least amount possible, and there I want to build the most equity. Right? Those are two things that you have to pay attention to when you're going through your process. Right? So if you're one of those people that say, 'Hey, I want to build as much equity as I possibly can in my equipment when I sell it,' with interest rates the way they are and the price of equipment and those kind of things, that's gotten to be a lot harder than it was, say, coming, you know, 2008 to 2020, right? It's a whole different animal, right? Plenty of equity in those machines. You saw a lot of movement in those machines. You saw a lot of different things happening. Now when you start looking at, hey, I've got a $500,000 something and I'm paying a $150,000 payment and the first $60,000 of that a year feels like there's $40,000 that the year has gone to interest, that really dips into your, and then you start seeing a sliding scale on top of that. So it's hard to keep that equity position where you need to be at. So you need to make that decision on what are you trying to accomplish with that piece of equipment when you get it from a financial perspective. Then that can you start in the conversation about is it better for me to lease a piece of equipment or is it better for me to run a piece of equipment via like a traditional loan, like an annual amortized loan basis, right? What's that work when you start talking about your tax base, right? So when you have a depreciation schedule and then you've got, you know, if it's a lease, you just have a payment that shows up on your balance sheet as not a liability, but it just shows, hey, you got a payment out there that's going to be this amount of money. So all those things come into play. Okay. So when you start having that conversation, one is you got to bring your accountant into the fold, like what's the better play for me on this situation? But also, am I going to go from, you know, I got a thousand-hour combine now, do I want to go back to 300 hours or do I want to go back to 500 hours, right? I mean, it's a big difference in machine, right? Am I going to go up in the class, right? Am I going from, hey, I got two, you know, class A combines now, I want to go up to a class 10 combine or whatever it might be. Like, what's that look like and how's that going to support your operation? And so when you start thinking about those things and what's growth look like for your operation, if you're one of those people that have the, where there's no one coming back to the operation, this is your, you know, I've heard this so many times, 'last year my farm,' you know, and except that last year, last 10 years, you know, but as you start looking through that, like what's that time frame look like and where does that go? So what is it that you truly need to make that operation work? And if you're in a growth phase, right, you can grow a farm quite a bit without really adding a whole lot of equipment in today's world, right? You can add quite a few acres and not necessarily add a lot of equipment to it. But if you are in a growth phase, you know, what's that look like? Are you going to buy enough equipment just for this year or, hey, I want to add a little extra efficiency because I know two, three years down the road, you know, there's going to be some opportunities that pop up. So I want to be ready for that when those come through and work our way through that. So I think that's some scenarios I run through my mind a lot when I'm thinking about what's going on in the marketplace. Do I want to lease or do I want to buy? What's maintenance look like on those machines when you get them, right? How and what kind of maintenance schedules are you looking at? And then what is your ultimate goal, right? Are you trying to maintain a lot of equity or are you trying to run things as cheap as possible, right? Those all those things come into play on what is the right timing and what is the right machine for me as I move forward in my next purchase opportunity.
Yeah. I mean, those are, I mean, it's such a big decision, but like, I like how you broke it down, Casey, and it make it bite-size. Take and answer each one of those questions. Kind of build it out, build a plan back to it, and then go out there and start to look and search for the things that you need. You know, I know we always put pressure on the end of the year to make some of these big decisions. Where are you in the camp of, you know, do it before the right time or do it when you have the right equipment? Which is more important?
Well, I mean, I think the end of the year, I don't think you should let, you know, any accountant will tell you this, any banker will tell you this, anyone financial person, like don't let the end of the year dictate, you know, let your tax situation dictate what your next purchase looks like, right? It's a cash flow thing and there's all kinds of things that come into play in that. So as you work your way through that, you kind of got to think, oh, I'm going to go out, I don't want to pay taxes, so I'm going to, you know, well, now you start yourself with cash next year and now what are you doing? Right? So it's kind of a rock and a hard place scenario. So I look at it as if you got to pay taxes at the end of the year, which I hate doing, by the way. I'm not, I'm sitting here, I'm not going to throw up my let's pay taxes flag here. I'm not saying that at all. But don't let that dictate, you know, what it is that you're going to do, right? If you're already in the market anyway, by all means, makes perfect sense. Rushing out to go do something and pick up an extra tractor or those kind of things, I don't think that's a... I would more look at, okay, well, I got the tax situation I got to take care of. I'm going to pre-order fuel. I'm going to pre-order input and seed, those kind of things like that, and try to maximize all that first before I went into the equipment. Here I am, an equipment guy telling you that, but I mean, you know, the equipment side over here looking through those things because to me, you know, you got to have all that stuff, seed, fertilizer, those kind of things kind of lined up and ready to go. If you already have the equipment, right, you can just go to work and make things happen. So to me, I think it's just a smarter play a little bit to take a look at where you're at input-wise before you start looking at equipment. And then if you, by the way, if you take a look at some of the stuff that's come out of Truro over the last 20 years, I mean, when I first started doing this, equipment was one or two on the list. Now it's like seven or eight, you know. So it's just one of those things where that's flipped around a little bit just because of, oh, and machinery cost, but also input costs. I mean, it's not like seed corn's gotten any cheaper over the years.
No, it's not like those are small bills at all.
Yeah, absolutely. And I'm going to ask you this from time to time because I, you know, just this is my own personal mantra in life. I love a good deal. Are there deals out there right now? Should we be looking for them or is it kind of go out there and find things that fit for, you know, your operation and your budgets?
Oh, yeah. There's plenty of deals out there to be had.
Now, your local dealership's going to have plenty of stuff out there for you to look at, plenty of stuff for you to go out there. I can't think of hardly any dealerships that don't have some kind of a reduced interest rate as a hook out there somewhere. Some of them are 0%. I've seen a lot of that out there for 24, 36 months. I've seen 1.9 and those 3.9s, those kind of things for, you know, 60 months, 72 months type of thing, you know. But I will say that I think, you know, truly finding that deal that you're looking for, it's not like there's no lack of them, right? You're going to find them and I think you can. But so look around, make sure. But I will say this, if you find something that you want, there's going to be other people that are in the exact same situation you are too, right? So there's not like that many great deals out there to go get. So, you know, so you're not going to be alone when you find one. You better be ready.
There's not a lot of people that have their inventory like, 'All right, everything out here is 0%.' It's like, you know, these 10 machines are 0%, right? That's what you run into. Yeah. All right. Well, good stuff. Anything you want to end on, Casey? I think that's a good spot, but give us a takeaway.
No, I just think, you know, just pay close attention as you start working through this as to what are your non-negotiables, right? You start looking at this and then what are your must-haves as you start working your way through that. And, you know, if you're looking at technology right now, I mean, there's a lot of technology out there that you can retrofit into what you already currently have and you don't have to go out and get the latest and greatest, you know, off-the-shelf complete whole good machine out there. You can get those little components to make things work. And I, me personally, just me sitting where I'm at, you know, I look at, I want everyone to go out and buy as much iron as they possibly can because that's what I do. But I think if you really step back and look at it, think about it, sit down with your dealership, think about your farm operation, how you're managing that operation, what you're doing there, and look at your technological needs that you want and where you want to be at and what you have in place now. So if you're at zero and you want to get to 10, what steps do you need to take to get there and what's that look like? And start implementing those things little pieces at a time and not two and a half million dollars at a time, right? You know, it's just hard to do, is it? Yeah, in this environment for sure.
Casey, as always, sage advice. Appreciate you joining us on Moving Iron Podcast. We'll be right back after this message from our sponsor.
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And welcome back to Moving Iron, joined now by Machinery Pete himself, Greg Peterson. Hey, thanks so much for jumping on here, Greg. As we look at this time of year, obviously we're racing toward this end of the year, and as I was talking with Casey, you know, we've got all of these things from, you know, these ARC PLC payments coming in. There may be a little diesel payment that could drop in folks' back pocket. You know, there's just, we're obviously bringing in the crop prices. Maybe we've hit a bottom, maybe we haven't. We're trying to hold some of the recent highs out there. And so, you know, I do feel like there could be some capital out there for some machinery decisions coming up. What are you seeing out there in the wild in terms of what's happening at auctions as we get toward the end of the year here?
