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Source: by Margy Eckelkamp, The Scoop magazine

Used equipment values continued rising right through April 2021 after the second-biggest quarterly jump (7.8 to 8.5) ever on Machinery Pete “Used Values Index” Overall Index Rating. (Machinery Pete)

Each quarter, Machinery Pete publishes its Used Values Index to give top analysis and reporting on the used machinery market.

In its 1st Quarter 2021 index, Machinery Pete founder Greg Peterson said the first three months of the year proved to be the hottest market since the beginning of 2013.

"Auction pricing is on fire for good condition used equipment," Peterson says.

The red-hot equipment demand is simultaneously happening as manufacturers have had issues with components suppliers and logistics and had already ratcheted back production in 2020 during the more depressed commodity prices.

"This is only the second time in my 31.5 years tracking used equipment values I've seen the market be about the availability factor. The other time was mid-November 2007 into early 2008 during the ethanol push," Peterson says.
The Machinery Pete analysis is layered with data-driven insights from with its more than 100,000 dealer listings from across the country.

Here are 5 of the biggest takeaways from the 1st Quarter 2021 Machinery Pete Used Values Index:
1. Used equipment values continued rising right through April 2021 after the second-biggest quarterly jump (7.8 to 8.5) ever on Machinery Pete "Used Values Index" Overall Index Rating.

2. There was a "never-ending litany of record-high auction sale prices on a wide array of good-condition, used farm equipment in late 2020 into early 2021." For example, a 2007 John Deere 9620 4WD tractor with 1,225 hours, nice, sold for $270,000 on a March 22 online auction in Iowa - a new record-high auction sale price on 9620 by $75,000. The previous record-high auction sale price on a 9620 was $195,000 on a Jan. 2, 2009 dealer auction in Indiana for 9620 with 681 hours.

3. The "Machinery Pete Ratio" (MPR) is the average auction price on any model of used equipment divided by the average dealer advertised price. Peterson says historically the normal range for MPR has been 71% to 76%. As an example for the strength in the used market, the current MPR on Apache AS1020 sprayers (which are about 10 years old now) is 89.0% (Avg. Auction Price $109,431 / Avg. Dealer Advertised Price $122,980).

"Selling for nearly 90% of retail on the lot price at auction is heady stuff and indicative of the current reality in the used farm equipment market, helped again here by the rapidly rising cost of new equipment and also the tightening supply of used on-farm equipment dealer lots," Peterson says.

4. The big thing Peterson is watching-increases to taxes, which he is seeing as a clear outcome of the programs announced by the Biden administration. "Now consider perhaps the No. 1 truth I've come to know over my 31.5 years reporting on the farm equipment market-farmers do not like paying taxes," he says.

5. What do the trends mean for the equipment market going forward-Peterson gives an analogy of a freight train picking up speed going downhill.
"Conditions for new farm equipment sales are very strong and getting stronger while used equipment values are likely to continue rising," he says.

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