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Used tractor market never higher

Used machinery could be a good investment

Red hot? Sorry, not quite. More like scorching hot.

For 22 years, I have tracked the used equipment market in the U.S. and Canada. I have never seen used values as strong. I began to notice auction sale prices rising in August 2011, and momentum continued to build to a crescendo in December.

There were so many record-high auction prices, it was hard to keep track. Quality was key. If a piece of equipment was 2, 5, 10, 20, or even 30 years old and in very nice condition, it was going to sell high.

Factors driving the spike include the escalating prices and tightly controlled production of new equipment, strong farm income, and desire for year-end tax write-offs.

Blowing away records

For example, a 1991 Case IH 7110 two-wheel-drive tractor (131 hp.) with 1,477 hours sold for $57,000 on an August 13, 2011, farm auction in Minnesota. That's the highest auction price I've ever seen on a 7110, blowing away the previous record of $43,000 in 1996.

In the same horsepower range, a 1990 John Deere 4255 mechanical front-wheel-drive tractor with 12,240 hours sold for $44,000 on a December 7 farm auction in North Dakota.

Larger tractors were even hotter. I saw the new record-high auction price set three times in two months on John Deere 4960s (200 hp.). The capper (so far) is $87,000 for a 1993 John Deere 4960 with 3,425 hours on a November 26 farm sale in Ohio.

ATVs and UTVs also up

Used values on ATVs, UTVs, and smaller-horsepower compact tractors were also up in 2011. The average auction sale price on Kubota RTV-900 utility vehicles in 2011 was $7,630, up 9% from their average in 2010. There is a growing demand for good condition used utility vehicles. An example is the Kubota RTV-1100 with 102 hours that sold for $16,100 at an October 29 auction in Arkansas.

Garden and hay markets down

Two segments of the used-equipment market that did not see value appreciation in 2011 are garden tractors and hay/forage equipment.

Used garden tractor values suffer from excess inventory (both new and used) on dealer lots. This price softness in used garden tractor values goes back to 2008.

Used hay equipment values have suffered due to strains in the cattle and dairy sectors.

Used round baler values were soft all of 2010 into mid 2011, but there were signs of stronger used values the second half of 2011.

An example is a New Holland 166 hay inverter that sold for $5,200 on an August farm auction in Minnesota. That ties for the second-highest auction price I've seen on that model in six years.

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