Podcast: Used Farm Machinery Buying Guide - Will Prices Come Down?
18 Apr 2438m 38s

The supply chain disruptions you heard so much about from 2020 through 2022 unsettled the machinery market. Now in 2024, the farm equipment marketplace is still adjusting. Inventory of used machines has been climbing rapidly over the last year. This run up in supply should equate to lower sale prices…but it’s not. Casey Seymour of Moving Iron LLC and host of The Moving Iron podcast, provides a market update and outlook. If you’re looking to update your fleet, listen to this for Casey’s advice on buying farm machinery.  


Presented by CLAAS

00:00 Used machinery inventories are exploding. That's what we're talking about farm equipment and how much of it is in supply, what the prices are like. 00:09 I've got KC Seymour coming up in this episode of Extreme as Cutting the Curve. Welcome to Extreme ags Cutting the Curve podcast, 00:15 where real farmers share real insights and real results to help you improve your farming operation. This episode of Cutting the Curve is brought to you by cloth 00:25 where machines aren't just made, they're made for more with a wide range of tractors, combines, foragers and hay tools. 00:32 Cloth is a family business just as driven, demanding, and dedicated as yours. Go to cloth.com 00:38 and start cutting your curve with their cutting edge equipment. And now here's your host, Damien Mason. 00:44 Hey there. Welcome to another fantastic episode of Extreme Ag. Cutting the Curve. I've got my man, Casey Seymour. 00:50 You maybe don't know him, but you should. He just wrote an article that was on Successful Farming released last week titled Used Machinery 00:58 Inventories are Exploding. He records a podcast called Moving Iron. He's got a website Moving Iron, LLC. 01:04 He hosts a conference every year to talk about the used machinery market. He's actually been a client of mine. 01:10 He hired me to speak at his event several years ago. He's a good dude and he's exceedingly knowledgeable about what's going on, particularly in used machinery. 01:19 Machinery in general, but on the used side in particular. So Casey used machinery inventories are exploding. 01:25 Before we hit record, I said, I'm guessing the big takeaway is if you're a buyer, that's a good thing. 01:29 If you're a seller, not so much of a good thing. Why is there so much used machinery sitting around here? Uh, what's it mean? Well, 01:37 Damien, thanks for having me on, man. It's always a pleasure to sit down and, and, uh, talk shop with you here, man. 01:43 So appreciate you having me on. Um, and if you're watching this, by the way, if you're, if you're a listener, that's great. 01:49 Remember, you can watch the extreme ag and the Curve, uh, podcast on Acres TV or on our website. 01:57 Casey is not an Irish fisherman, even though he looks like it. He's got his hat. He's got his, um, what do they call that? 02:04 Like, uh, that type of sweater that's got a sweater, huh? That's called a fisherman's sweater. 02:10 So it's a fisherman's sweater. He looks like he could have just stopped off of a, uh, gotten off of a dock in, uh, somewhere in, in, uh, Ireland. 02:17 Anyway, so, um, you're not really an Irish an Irish fisherman. That's a good clarifying point. 02:23 So that's, uh, but you know, I think, I think the thing about this, Damien, that that's probably the key takeaway is 02:30 that this is just one another one of those things from that's messed, you know, COVID messed the world up. And this is just one 02:36 of those side effects that we're seeing here. 2020 is when the used equipment marketplace really started to see a, um, decreasing inventory, 02:46 especially on the row crop tractor side of the business, um, loader, tractors, those kind of things. 02:51 You'd look at what happened in, uh, 2021 and it just kind of started snowballing, you know, started taking off and running. 02:59 And if you look at where things are at in 2022, again, just to kind of again, uh, 03:06 keep rolling in 2023 was basically the bottom right? So, um, first quarter, 20 meaning the bottom in terms of inventory, there was less inventory, less used machinery. 03:15 Yeah. And is it safe to say that there was less used machinery in 2022 trending into, its, its the bottom at 2023, just 03:24 'cause the pro machines hadn't gotten made, did they, did the plant shut down in 2020 and that's why there was less machines 03:31 that were two years old to even be? Well, so much of the stuff got delayed coming outta the factories, right? 03:37 So the next best option was a one-year-old this or a 2-year-old dad or whatever was available at the time. And that's really what, what, what did that, if you go back 03:45 and look, I'll just give you some numbers here for reference. If you go back and look at, um, 2020 row crop tractors, 03:53 there were 16,246 machines on the marketplace. And that would've been at February timeframe of, of 2020, same timeframe. 04:03 So in 2020 February, 2020 before the whole shutdown and all that stuff, the number you just gave, that means used tractors that fit that category. 04:12 Yep. Sitting anywhere in the United States available for sale on, on this happened to be on tractor house.com. Okay? So these are the, 04:20 the available trucks, machines out there. By 2021, there's about a 4,000 machine drop to about 12,646 04:30 and 2022. There is a about another 4,000 machine drop to 88 95. And then there's about 2000 machine drop in 2023, 04:41 and that's when it, that's really at the bottom. So we got to like 6,000 from 16,000 over the course of two years. 04:48 Yeah. Chewed up about 6,000 out of that, uh, uh, actually 10,000, yeah. Chew up 2000 machines. Mm-Hmm. Out of that deal, right? 04:56 So now jump forward into 2024 to the same timeframe. In that February timeframe, there were 12,931 machines on the market. 05:04 So just this time, you know, a month, you know, recording this in March, so back at the beginning of February, there were 12,931 machines out there. 05:14 You increase the supply of used equipment on the marketplace by 188% in that one year. 05:21 So basically you gain back everything in one year that you lost between 2021. And, you know, because you think about 2021, 05:29 you're at 12, 6 46, and 2024, you're at 1293. So basically you're back to 2021 levels of machinery. Now, the other key factor in that, that that's driving some 05:42 of this stuff is that roughly that timeframe between 2020 and 2023, every manufacturer had between a 40 05:49 and 60% price increase of machinery in that timeframe, right? And, and interest rates from 2017, 05:58 um, to 2024 increased by like a, I think I have it in there, like 188% or something crazy like that, 187% 06:07 or something crazy like that. Mm-Hmm. So that, that interest thing is, is probably one of the more overlooked things when you're looking at this, 06:15 because it's not just the end user farmer that has to worry about interest rates, it's the dealer too. And the dealer's looking at holding costs now 06:24 for plant holding costs that are the same interest rates that farmers are dealing with, that seven to eight to 9%, 06:30 depending on what it is and who they are and all that fun stuff that goes into that. But, you know, you start looking at some 06:35 of these machines out there that, that's a big driving factor of this. So I, I just wanted to point out that's you, you know, 06:41 we obviously think about things from the farmer and our listeners here at Extreme Ag, mostly producers, that's fine. 06:47 But remember, like you said, money is a cost of money is a, is an input for everything. 06:53 I I point this out all the time. You, you know, use money to buy inputs to put in a crop. You use money to have machines sitting on your, uh, 07:02 farm equipment dealership lot, right? You used a point in here if a machine has a value of $500,000, and that's not unusual that a, 07:10 what a year old combine could be worth half million, right? Yeah. Machine has a value of $500,000 07:17 and it's financed at 7% interest. The holding cost is 35 grand per year. Very simple, 7% times 535 grand a year. 07:24 We'll divide that by a month, and that's $2,917, $2,900 a month to let something sit. Or as you point out, $96, $95, 89 cents per day. 07:34 So you're pushing damn near a hundred dollars a day that that thing sits. And it doesn't need to sit on your lot. 07:40 It doesn't matter if as long, if you own it wherever it is, if it's on a truck, whatever the point is, 07:44 you're, you are paying it. And, uh, that's why your point here is these ag dealerships are trying 07:53 to not sit on much inventory, right? Right. Yeah. They wanna move it as fast as they can and, and keep that stuff moving. 08:00 So you know that there's inside the, the dealership kind of, um, ecosystem. 08:07 There's, there's a thing called inventory turn and a thing called washout cycle. All those things are, are kind of married together. 08:12 But, you know, if you look at an inventory turn structure, and let's say that you, you have the same setup here. 08:19 Let's just say that you have, you know, in a, in a normal year, you're gonna have $10 million worth of used inventory, right? 08:26 And you're gonna do it at 7% interest, right? So that's seven, $700,000 worth of interest, but you're gonna pay a year on that, right? 08:35 So that doesn't matter if you, if you turn that, you're still gonna pay $700,000 in interest across the course of that timeframe, whether you 08:42 turn your inventory one time or a hundred times, right? That the, the inventory, the interest clock still ticks, but it's the amount of money that is associated 08:52 with each one of those, those turn cycles is what dictates how much revenue you're gonna 08:58 generate on the backside, right? So just because you have a, you know, $10,000 margin on something, 09:03 but it's set on the lot for, for a year, and it costs you $35,000 to do that, actually, you're in the whole 25 grand Yeah. 09:09 Right? To do that. So the idea is to turn that equipment as fast as possible, and that's what every, every dealership in the, 09:17 on the planet is trying to do is how fast can we get to the next sale and what's that sale look like? And the, some of the, some of the stuff you've seen 09:25 where these, these big, these big auctions and stuff you see aren't necessarily because, and I think that's the, I wanna make this very clear. 09:32 This is something that I've, I, I've talked to a lot of people about, and there's this misconception that because there's a bunch of stuff going to auction, 09:39 that there's somehow a, that the economy's bad or, or this, that other thing. I don't necessarily believe the, the ag economy is, is bad. 09:48 This means it's definitely going through a, through a stretch right now that's not as good as it has been. 09:52 But there's still, uh, income out there, there's still guys that are, that are looking at, you know, having, being able 09:59 to make profit on the farm. What you're seeing here that's driving a lot of this stuff is the amount of, of the, uh, stuff 10:06 that's in the front end of the washout cycle and washout cycles a is a whole thing where from the time you sell the new piece all the way 10:13 through to, you wash it all the way out to the last trade that no one brings the trade in on. 10:18 So it stops the, it stops the, the to production of babies right along the way. Yeah. You go from a 1-year-old trade 10:24 to a three-year-old trade to a seven year-old trade to a 10-year-old trade. And finally the guy writes you a check at the end, 10:29 doesn't trade anything in type of thing, okay? That, that washout cycle as it goes along, all of those things that, that are associated with that, 10:39 you have to keep that thing spending, because the more time it spends there, the more money it costs you and all those kind of things. 10:44 So it's a, the drive that we see at the auction right now, the amount of stuff we see going 10:50 to auction right now is just that so much that stuff's on the front end of the washout cycle that you have to find all the guys 10:57 that wanna buy a 1-year-old or a 2-year-old, three-year old, something that, and then in today's market, that could be those one to two, 11:05 three, those, those three numbers, those 3 1, 2, 3-year-old stuff, you could have a, a $600,000 use piece, a $500,000 U piece, 11:16 and a $400,000 use piece. And you gotta go find those people that can, that wanna buy those and, and, 11:21 and then associate those all the way through. And, you know, those, those are harder to find today than they were, you know, two years ago 11:30 or three years ago, just because of the way farm structures have changed over the last five years. 11:36 And the amount of consolidation that we've seen and the number of acres that are controlled by individual farmers that limits the guide, the used buyer 11:44 that, that can afford the $600,000 something. It's just hard to find that guy. Um, and it's getting harder every year. 11:50 So that's an important thing. You're, you're basically talking about demographics of the customer base, meaning farmers, 11:57 that's who's listening to this, and then how that changes what's happening on the supply and demand of the machines. 12:03 I want to get more on that for sure. Um, and then I wanna talk about, you know, obviously other data points that you're seeing. 12:11 Uh, hey, I wanna remind you that you're listener about Nature's, nature's one of our business partners here at, uh, extreme Ag. 12:16 Awesome. People love working for them. I was in their, in their pan, uh, in their booth at Commodity Classic. 12:22 We did panels with the farm guys. Uh, really good information with Tommy Roach there at Nature's. 12:28 They, uh, they've got a product for you, you know, in the, in this ag environment, 12:34 you probably don't wanna just be flinging fertilizer out there and not getting a return on it. 12:38 So we talk about spoon feeding or targeting periods of influence on the plant, and that's all that nature's really is, uh, all about. 12:46 So they're liquid fertilizer products are powered by Nature's bio, okay? Target specific periods 12:51 of influence throughout the growing season via precision placement techniques as a means to mitigate plant stress, 12:56 enhanced crop yield, and most importantly, boost your farm's. ROI, very important in the year, like 2024, 13:01 check out nature's dot com, N-A-C-H-U-R-S nature's dot com. Um, you talk about the demographics 13:07 and you also said consolidation. It seems to me that there's some consolidation that's happening a little bit more quietly. 13:13 Um, because that's what happens when we start seeing sort of a downturn. Some people, I think, uh, usually a farmer stays 13:20 or stays in the game, uh, about three years longer than he should. I would've told anybody 13:26 that said, Hey, I'm gonna hang it up. I would've said 2022 looks a really good year to hang it up. Well, they're gonna hang around. Does 13:32 that also then bring a bunch of pretty old used inventory? Is that, is that glu the market then? 13:38 Because now the guy that farms six or eight or a hundred acres or a thousand acres has stuff that's maybe 10 years old. 13:46 Did that glut the market or is that not really a factor? No, it really seems like what drives the marketplace is the 13:51 stuff that's 10 years old and newer. That's really what really drives the, the market that has a big impact on what we see there. 13:58 Um, just simply because 10 years old is kind of like, it's like the Pluto of, of, uh, of pricing. You know, it's just far enough, it's 14:07 so far away from the sun that it gets cold enough, but it still matters type of deal. Mm-Hmm. Um, but if it's not in the middle, like 14:13 that 5-year-old plus stuff and newer stuff that, that really, really swings the marketplace. 14:18 So the older stuff, I think is actually easier to get rid of. And, and to be honest with you, the guy that's got 14:23 that stuff in today's marketplace, um, if it's predef, and I'm not talking like 1960 predef, but if it's like, uh, you know, 2012 14:34 and older with decent hours on it, 2015 and older with, with the decent hours on it, um, typically you can get a fairly good premium price for that. 14:42 I watched a, a 78 20 John Deere, uh, little loader tractor sell the other day. Um, and it sold for over a hundred thousand bucks. 14:50 And I'm pretty sure that it didn't cost a hundred thousand bucks when it was new. Mm-Hmm. Uh, if it did, it was slightly under that. 14:55 So the guy ran that thing for four or 5,000 hours and got his money back. Yeah. Uh, plus some. 14:59 So I mean, it's, those kind of things are, are, are really the hot topic market right now when you start looking at where that marketplace is at. 15:06 Interesting. Alright, so the market's glutted, is it safe to say glutted just on certain ends of it? 15:12 Yeah, that, that it's the 1-year-old. That one to 3-year-old stuff is really what's choking the market out right now. 15:18 Okay. So what do we do? You do. We've been through here, we've been through here before. There are less buyers, right? 15:26 I mean, you just said something interesting. You said the person that's there to buy a one or 2-year-old machine, there's less, 15:33 there's less of those people. So what's that mean? You know, I think that's, that's an interesting topic. 15:41 You know, I've thought about this a ton. You start looking at where some of the stuff comes into play at 15:46 and how these things are playing out. I really think that's where you start looking at where your machine stacks up in this upgrade kit phase 15:54 that we're going through right now. Right. Whether it's a plant or sprayer, um, tractor's not free 16:01 before too long we'll have an autonomous kit, so it'll be about form. Um, so you start looking at that. 16:06 I think that's kind of how some of this stuff gets, gets cleaned up a little bit is, um, you know, I can, the machine I have currently isn't able to be upgraded, 16:17 so I'm gonna jump up here and grab a, a machine that's five years newer than what I've got, so I can, I can, you know, 16:23 get the autonomous kit or whatever it might be. I think those are some of the systems that we're gonna see there. 16:29 Um, I think what we're seeing right now at the auction market, we're gonna see this auction market thing kinda, 16:34 kinda roll through 24. And I, my guess is to probably end of second quarter 2025, you know, mid through midyear where we see some of 16:42 that stuff starts to slow down where things have gotten in, uh, back into check. 16:47 Um, you know, I think it's, it's interesting to, to watch how the manufacturers are, are, 16:53 are doing and what they're doing. Um, you know, you look a good example, you know, look what Deere's done with the nine combine. 16:59 Um, what they're doing, what the nine RX 7, 8 30 I guess is what it is now, eight 15. Um, you know, they've, what are they doing? 17:10 They talk about, well, they talk about that in, in some of their sustainability reports. And I, I would encourage anyone 17:15 to go read all the manufacturers sustainability reports, Uhhuh and just read, read what their version 17:20 of Saving Earth looks like. And, um, you know, you look at what they're talking about and what they're doing. 17:26 Um, you know, they, they specifically talk about making the X nine in there to offset two 17:31 and a half, you know, eight class eight combines. And they talk about, um, you know, building things, um, to, to decrease their footprint and rebuild and reuse 17:43 and repurpose. I think, I can't remember the exact verbiage, but if you go look at the, what they're talking about there, 17:48 I mean, that's where some of these, uh, upgrade kits for planters and those kind of things come into play. Those are, um, you know, take the same bar 17:55 that you've had forever put on some new row units and, and you've got a, you've got a brand new planter, um, and you know, AGCO just, 18:03 or AGCO Precision ran out their new version of that too. They have the cornerstone system. 18:08 That's a, that's a complete row unit now that you can do that. All you need is a seven by seven bar, just like, uh, 18:13 you know, any, any planter that you get, it's got a seven by seven bar on it. And, uh, you can, 18:18 you can put the latest and greatest stuff on there. Um, I think you're gonna see a lot more of that in the future. 18:23 And that's gonna drive what you see happen in the used market right now to a different spot. 18:28 Um, meaning it's going to gobble up. We're gonna gobble the stuff that's one to five years old then is 18:36 certainly still works. And then you just upgrade the technology is what you're telling me. And that's, that's where this, so 18:42 that means we're going chew through a bunch of this supply. We should, because there's gonna be, 18:46 there's gonna be a point in there somewhere where there's a cutoff on what you can upgrade. It's gonna happen. I mean, 18:52 it's just, everything's like that. I mean, I don't think of anything that you can, I've got three iPads in my house I can't even use 18:58 because I can't even, I can't even surf the internet 'cause there's so old. So there's gonna be a come a point in time when there's 19:04 gonna be a hard stop someplace that says, Hey, if it's, you know, model year, whatever to yeah, 2016 or older or whatever that is, 2010 or older. 19:14 It's not, it's, it's, so that's fine. That's, that stuff will still find a home, won't it? Mm-Hmm. I would think so. I mean, I think you're gonna find, um, 19:25 that stuff I think will open the door to, um, some of the, the, you know, the quote unquote hobby guys 19:31 that are doing it on the weekend type thing. You know, they're, and I say that, say that loosely because they've got a job in town, 19:37 but they, um, you know, they farm, farm when they can type of thing. Um, I think that opens the doors for them. 19:45 Um, but I also believe too, that if you look at how some of these things are gonna play out, there's some disruptors in the market coming as far as 19:55 as from what I look at when you start looking at, you know, like seeing spray for example, um, the smart farm system 20:02 that, that AGCO is gonna roll out here next year for their system where you can spray and see the difference between, you know, weed and, 20:10 and crop, and you're gonna decrease the amount of chemicals that you spray and fertilizer you spray, 20:15 and those kind of things that, that some of these, um, these co-ops and those kind of things, they're gonna have to take a look at their, at their business model 20:23 and start deciding, do we get into the custom planning game or do we do something else? 20:29 I mean, I think there's just gonna be some, some disruptors there that, that are gonna force other, that non-traditional, um, services 20:38 that you would see just based around where technology's going. Mm-Hmm. Yeah. 20:42 So about the, the supply that we're talking here, you know, it, I you're, you're like, 20:51 you've been in this your whole career, so to me, uh, you know, I think, I think it's a hell of a time to buy, I guess, but, uh, is it, is it, have you seen this before? 21:05 We have, right? Oh yeah. Big gluts. Oh yeah. We saw this back in 20, coming out of 2012, you know, that last big boom we had, if you looked at how things were, 21:16 were positioned there, um, you know, 2009, 10, 11, 12 were some amazing years. It was an absolute kind of over year. 21:25 And then 14, yeah, in 2014, the wheels on the bus fell off and it crashed and burned in 2015. 21:34 And if you look at where, how things played out then, um, that you could look at the, 21:40 at the machines on the marketplace and where the bulges were, and those were all the, the twelves 1314 model stuff that just kind 21:46 of just would never go away. And we are, uh, we're kind of, we're kind of headed back to something similar to that. 21:54 I don't think it's gonna be anywhere near that bad. I mean, in 20 14, 20 15, the amount of planners that got sold at auction was amazing. 22:02 Um, and that's oddly enough that was a machine segment that always kind of stayed in a little bit of a harmonious balance there that, you know, 22:11 it seemed like it was a one in one out type of deal, and the, the inventory never got too outta control. And we saw a pretty big dip into, um, 22:20 through the same timeframe we talked about earlier. Um, but the, uh, weird thing about that is that they're, uh, we're back to 2017 levels. 22:29 We saw 159% increase in the amount of planners that were got used planners that got put back on the marketplace. 22:36 And I think a lot of that was just, they had really good, really good, uh, on-farm income, 22:44 excuse me, on-farm income. And they had the, uh, ability to go out and get, update that planter. 22:50 They had been running for a while Mm-Hmm. And some guys were flirting with, uh, with the rebuild kit situation. 22:56 And I think some guys just said, you know, I'm just gonna get the, the new one from the factory. And then we've seen, that's why we saw such a sharp incline 23:03 in the amount of planters that hit the market. Okay. So a bunch of planters are on the market right now, and I mean, I, I looked at your graph here. 23:10 Tractors are the most, uh, there, but then it's lots of tractors. And this is at this point in time where we are right now, 23:19 but, uh, 10,000 used combines. Does this mean every, again, does this mean every combine in the country? 23:26 This means just the ones that are auction listed? Those are, no, those are the ones just listed on tractor house.com. 23:31 Okay. That's all those, that's just what's listed out there. Yeah. Well, you've been in the business, does that, 23:36 how much, how much is not listed on tractor.com? Oh, that's a, there's probably, I'd have to go back and, and look at my notes, 23:48 but, you know, there's four or 5,000 combines that get produced, um, across, well, there's more than that. 23:57 That'd be by just one manufacturer. So you do, there's, there's quite a few out there. John Deere makes 5,000 combines a year. 24:03 Is that the, the number that's something like that. I had to go back and look and you kind of mismatch everyone else together. 24:09 And it's, I think it's close to 10,000, but don't quote me on that. I gotta go back and look. But if you, if you, uh, 24:16 look at where, see where that's at. So for every one of those machines that are sitting there, you know, the majority of those are 1-year-old machines, um, 24:24 one, two old machines that are sitting there. And those are gonna be the ones that are gonna be a direct replication what's out there. 24:30 So I would guess that this, what you see out there, just guessing, that probably represents 10 to 20% of the actual, all the, all the combines on, on the, 24:41 that are being used in the, and what's, you know, out there for sale. So Right. It, what's we see out there is probably 10, 20%, 24:48 something like that would be my guess. Who should be buying right now? Should everybody be buying right now? 24:55 Um, that's a good question. I mean, there's the strategies of buying, you know, what, what's your cash flow look like and where you going? 25:02 I mean, a lot of these guys can buy a machine now, and just because of the way the loans are set up, you can defer 25:08 that payment to 25 and it's, you know, see what happens then type of thing. Um, if you're looking at who's buying now, I would say 25:16 anybody that's in the market to upgrade something they've got for good reason, like the capacity 25:21 or whatever it might be, that would be who I would recommend to buy something right now. But I, I would, 25:28 my theory on this whole thing would be if you can buy, if you can sell your machine now and wait to buy something in, in the fall, 25:34 that would be the time to do it. Oh, okay. So wait, selling is better now than it would be in the fall, and buying is better in the fall than it is right now. 25:42 You not be seasonal. Yeah. I mean, right now you're at, I think right now you're at the high end of the market. I, I see it's gonna kind of cascade down through 25:48 and we're 24 and we're, it's, you said it's high end market, but we're, we're talking about record amounts of inventory. 25:53 So even at, at the high, it's high end, even though there's this much stuff sitting around, I think there's gonna be more coming is my point. 25:59 So there's there there's more, there's more carnage, there's more, there's more depreciation. Yeah. A little more, a little more machines out there 26:04 because they've had enough machines come through the, uh, the cell cycle, you know, 26:09 and you're gonna see more machines come in, um, this is, this is the 2023 stuff. 26:13 We're gonna see the 2024 stuff coming in, um, as those, those, uh, roll cycles take place and what you see happening there. 26:21 So it's gonna continue to, we're gonna continue to see inventories grow. There's, that's not gonna be, this isn't, this isn't the, 26:27 uh, we haven't hit the peak yet, I guess is what I'm saying. So some of these larger scale operations do things like John 26:33 Deere has a thing called mud multi-unit discount or whatever they call that. And that means you don't ever really, 26:38 you just give 'em money, but you, I'm, I'm not sure it's more like a lease thing. Um, and then those machines are the ones that come 26:44 and they're six to 12 months old, right? Yeah. And then they had to be sold, go ahead. They had to be sold. Yeah. 26:53 So I mean, every, every manufacturer, every manufacturer has something where they do, um, uh, a, a role cycle, whether that's one year, two year, 27:05 three year, I mean, it's just depends on the customer and what they're doing. And, um, it seems like, uh, on, on the, on the Deere side 27:13 of stuff, that's where the, the most of that takes place and, uh, on the one year role cycle side. 27:19 So it's not a uncommon thing to see this time of year to have the, uh, the front side that of the one and 2-year-old machines stay full. 27:29 Um, just what we're seeing now, it feels like to me as I'm looking at this data, um, the majority of the, of the equipment just continues to grow in that, you know, 27:39 on a tractor especially, you know, that zero to to a thousand hour range, you know, almost a third of the tractors on the market are in that range. 27:47 And that's, uh, so you got two thirds of the market from, you know, from 1,001 to, you know, 25,000. 27:54 Right. So that's just hours. Yeah, yeah, hours. So you've got so much kind of on that loader on the front end of the side, uh, front end of 28:03 that, that it's just gonna take a little bit to get that through because we're looking at some really, 28:07 really high valued used equipment. And that's just, but flip side of that too is, um, the used equipment that's been, uh, older than that, 28:17 as those prices go up, so, so everything else comes up with it too. Maybe not the same pace, 28:22 but you know, you're seeing some machines now that three years ago were worth 80,000 that are, you know, banging a hundred thousand now just 28:30 because of their correlation to remarkable to me, because I thought you were gonna tell me that these, the, the, the inventory is just exploding, so it's just gonna, 28:38 it is like, it is just stuff's cheap and you're saying it's still not cheap a cheaps relative word these days, Damien. 28:46 I mean, I think that's, as you, as you take a look, what's go, where these prices are at, it's, it's still, you're still seeing some, I mean, 28:54 when you're looking at guess of 800, $900,000 new stuff, when that stuff comes back in used, I mean, well, 29:02 it gets priced in that seven or 800 or six or $700,000 range and so on and 29:07 so forth down the line, depending on how things come together. So it's just gets you, you just said that tractors are going 29:13 to be an issue in 2024. The number of tractors on the market is not the highest. The pricing has increased 40 or 60% 29:19 and that that's, uh, in the last six and a half, seven years. Right. So we're up 50% on average o on that. Right. 29:26 And that is also reflected in the use stuff. Yep, yep. So the price is there too. I mean, everything, it's, uh, 29:33 it's just like anything else, man. I mean, the price of a new something goes up, then everything else around it kind of comes up with it. 29:41 It's just like a, I mean, I use the same, you know, somebody asked me the other day, uh, when, when do you think we're gonna get back to $300,000 combines? 29:49 And I say, I said the same day we get back to $25,000 pickups. And that's, that's, uh, 29:55 it is just the world that we live in. Everything is just, it's not gonna happen so expensive and it's just, you would think after not gonna happen. 30:02 I mean, the pricing and stuff, the way things sit now after Covid and the price increases that we saw, those prices are still gonna stay the same. 30:09 Yeah. And it's just, unfortunately, it's just the world that we live in. So machinery prices are sticky. 30:14 Just like, uh, you know, we talk about once the inflation happens, it's here. Yep. Okay. Yep. 30:20 What's your advice to the people listening to this right now? You said if they can hold off till fall, 30:24 you think it actually, do you think this, this inventory builds and it gets even, uh, 30:28 the pricing gets softer between now and fall? I think so. I think that's gonna be, I think we're gonna see the normal auction period 30:34 of heavy auctions. Uh, where you see a lot of things happen is that at October to December timeframe, um, you can 30:43 probably argue September late, late August, early September as a start date too. 30:47 But as you're looking at what those things kind of roll through the situation, um, you're, you're gonna see more stuff hit the marketplace 30:55 and you're gonna see more stuff come in. Um, now all that could change tomorrow if we get six or $7 corn all of a sudden, a lot 31:03 of this stuff takes care of itself. Uh, and we're right back to, to where we started. But, um, where we can ease some of that, that pressure, um, 31:12 I just think the, uh, the, the situation that we're in now isn't necessarily because anything was overproduced 31:21 or oversold or anything like that. It's just we had a unique one-off situation where, um, finally supply caught up a demand. 31:29 And what I thought was gonna happen was that, that we're gonna see an easing end into this because manufacturers are catching 31:35 up and we didn't see that. We just saw everything. Okay, cool. We can make everything again, and we just, cool, here it is. 31:41 Okay. Just right there. So, so the stuff that's, that's sitting, the stuff that's in, in heavy supply is stuff 31:46 that's one and two years old? Yeah, pretty much. Yeah. I mean, if you look at the, at the hour curves, um, and you can, you can definitely see, 31:56 um, see how that works out. And I got an example here. I can tell you real quick. Um, if you go and look at the hour populations on some 32:04 of these, and we'll just pick, uh, row crop tractors, um, and this is as of, uh, this is, 32:10 this would be here in 1st of March. Um, right now, um, you've had actually, you had a little bit of a decline in that. 32:20 That's, and from the month over month deal, so in that, um, zero to a thousand hour range, this, 32:28 and here, the 1st of March, there were twenty four hundred and twenty three machines. And the same period last month in February 32:37 would've been, oops, sorry, that's not right. I'm looking at the wrong, wrong line. Hang on a second here. Yeah, so actually it had increased. 32:47 So you went from 35 40 in February to 37 43. So you had about 200 machine increase in that same, in that same period. 33:01 Yeah. Whereas everything else beneath that, it's kind of staying, it's kind of staying in the same spot, so, got it. 33:08 All right. And then the other part of it is on the, uh, the technology. So these things, generally the stuff that's within about six 33:17 or 10 years old, um, it, it can be updated, so there's not gonna be, it's like none of that just gets to where, oh, it becomes, uh, the, the hobby guy. 33:25 It, it's, it's, it's gonna be pretty damn old to become the, the 400 acre, uh, weekend farmer is gonna be buying stuff 33:33 that's 15 years old. And that's not really what you're, that's not really on your radar when you talk about these inventories. 33:39 Yeah, no, I think, yeah, I think when you're looking at some of this stuff now, I mean, there's, there's right now, 33:43 like right on a sea and spray, I think it's 2017 or 2018, that you can update a, a sea and spray machine to, um, with, with Z apply. 33:54 And so I think, I think it's gonna be that, that cutoff in my opinion. I think, you know, you asked me a little bit ago, like, 34:00 what, what's my, what's my advice to buyers? And I, I would say be conscious of, of when you start looking at these things, 34:06 do some research on upgrade kits and where, where that cutoff is. 'cause some of that stuff's already listed in there, 34:12 and you can, you can see that, and that's gonna, I don't think it makes a big difference until stuff becomes, you know, driverless and autonomous. 34:20 And that's when I think that that'll have the biggest swing in the marketplace. But, you know, you wake up one day 34:24 and it's, you know, say, just say 2018 is the, there's a cutoff on the tractor. Um, or, you know, 2020 34:31 or whatever is a cutoff on the tractor. And, and, uh, you know, what's your, what's your 2019 worth now? 34:37 What's your 2021 worth now, you know, that's, those all of a sudden make a big difference in values. Absolutely. They do. All right. 34:43 And then the other last thing about on the demographics and and whatnot, do we get to where there's just less machines? 34:49 I mean, if we see consolidation, uh mm-hmm. Bigger and fewer of them, is that where we're going? Or is it autonomous and more of them 35:00 and smaller, which is where I actually think it's going. So I, you know, I used to think that, I used 35:07 to think it was gonna be, we're gonna have 10 planters in the field working. All everybody knows where everybody's at 35:12 and just banging it out, right? Um, but you kind of look at the path that these dealerships or the manufacturers are going 35:19 and they're, they're building 800, 800 horsepower machines now, tractors and stuff like that. So now you can pull a 120 foot planter, you know, uh, 35:30 200 foot plant or some crazy like that. I'm sure that'll be out before too long, but you know, if, and they're all autonomous ready, right? 35:38 So you start looking at, at that, I mean, the plan behind that is, well, you kinda have to build something for today 35:44 around the, around today's current labor market. Yeah. What that looks like and all the stuff that comes into that. 35:48 But I don't know, do they come out with 200 horsepower tractors that are pulling, you know, 12 row planters in the field? 35:58 I don't know, but I used to think that, and I don't, don't, I'm still sticking with the idea that we go fewer, I'm more of 'em 36:05 and smaller versus less of 'em and bigger because hell, they can't fit down the road. And, uh, that, that's the other thing too. 36:12 I mean, it's just, you start looking at some of the stuff. Um, I think that's why track machines have gotten to be 36:16 so popular on these machines. So now you can have the same footprint on a, a dual up, you know, like a dual up combine these days, 36:24 if you'd see those things going down the road. Yeah. They take up the entire road. I mean, both lanes and, you know, you're trying 36:29 to go across some of these rural bridges and stuff like that. I mean, yeah, they were raid the rural bridges 36:34 that were built in 1963, and they have a capacity of, uh, three tons in the, the headways there. 36:40 If you go fast enough, you'll be all right. You know what I mean? So. All right. Anything else? Closing words last thought? No, man. 36:48 I think I just appreciate you being on like, you, like I said, uh, you know, I, I look forward to, uh, having more of these conversations 36:54 and, um, if anybody wants to reach out to me and feel free to give me a, you can text me at my phone number's (308) 225-3305. 37:03 You can text me there. You can shoot me an email at moving on your podcast and moving on your podcast.com. 37:08 And I'd be happy to discuss what's anything you got. And I'm on the social stuff, so you can find me there at Moving Iron Podcast as well. 37:14 So check me out. He lives in, he lives and breathes used Farm machinery. His article is in Successful Farming, just last, last week. 37:23 Go to agriculture.com and check it out. His name's Casey Seymour is in a machinery section, and, uh, you'll be seeing more from him. 37:30 In fact, every month at the end of the month, his, he does a special podcast for successful Farming. Right. And it, it ties in with yours. 37:37 So Moving Iron, moving Iron is the name of his podcast. Moving Iron is the name of his company. Yep. He's a good dude. Thanks for being here, Casey Damien. 37:45 Appreciate it, man. So next time, thanks for being here. Hope this was helpful to you. 37:49 And if you have a topic you'd like me to cover, be sure to drop us a line, hundreds of these podcasts cutting the curve@extrememag.farm, 37:58 hundreds of videos that I have shot and the guys have shot in the field at Extreme Mag Farm. All free for you to go and check it out. 38:04 It's an absolute library of great information you can use to improve your financials and your farming. 38:10 That's what we're here for, cutting the curve extreme ag. Till next time, thanks for being here. 38:13 That's a wrap for this episode of Cutting the Curve. Make sure to check out Extreme Ag Farm for more great content to help you squeeze more profit out 38:21 of your farming operation. Cutting the curve is brought to you by cloth where machines aren't just made, they're made for more. 38:29 Visit cloth.com and start cutting your curve with cutting edge equipment.