Used equipment steady-to-strong, with levelling

The used farm equipment market in Western Canada has been relatively unaffected by the COVID-19 pandemic.

Ritchie Brothers recently published its used equipment market trends summary that looks at the volume and price of equipment that ran through its North American auctions in the first two quarters of this year.

Jordan Clarke of Ritchie Brothers said the auction business has large swings in volumes and pricing that are closely related to how things are going in specific market segments, as well as the overall economy.

“If things are not going well in the economy and people are not doing well, that’s when the auction business tends to really move along. This year has been very steady (in the western Canadian used farm equipment market),” Clarke said.

He said pricing has remained relatively steady over the first half of the year compared to 2018 and 2019, but there has been a levelling off of the inventory at Ritchie Brothers sales.

“In the years of 2014, 2015, 2016, manufacturers pushed a number of assets into the marketplace. To a certain point the market was able to handle that, but there was a surge of used equipment from a dealership standpoint and from an auction standpoint available to the marketplace,” Clarke said.

The Western Producer has heard from farmers frustrated by rapidly decreasing value of some of their farm equipment including combines in the years after equipment manufacturers moved excess inventory into the market.

Clarke said the supply and demand appetite for used farm equipment including combines, sprayers and four-wheel drive tractors is more equal now, and that over the past two or three years there has been a normalization of the amount of these items in Ritchie Brother sales.

One category of farm equipment sales in Western Canada that stood out earlier in the year was combine sales numbers and pricing.

In the first half of 2020, combine sales increased more than 15 percent and prices increased 25 percent compared to the first half of 2019 in Western Canada.

In the second quarter of 2020, Ritchie Brothers auctions saw the highest volume of combines sold since 2012, with the highest median prices for all second quarters with a year-over-year price improvement from $85,000 to $90,000.

During 2019 and the first half of 2020, more than 600 combines, model year 2000 and newer, sold in Canada.

The top three combine brands sold by Ritchie Brothers in Canada were John Deere, CaseIH and New Holland, which made up 88 percent of the units sold, and John Deere models accounting for more than 50 percent of the sales.

“John Deere is the category that we tend to sell the most of in pretty much every category that we look at, sprayers, four-wheel drive tractors and combines,” Clarke said.

In 2019 and the first half of 2020, 61 John Deere S680s sold in Canada for a median price of $160,000.

“We’ve gone into the situation where we’re selling more later model units, so we’ve had some record pricing over the past spring for combines, numbers that we’ve never hit before,” Clarke said.

He said the company is starting to see more one- and two-year-old combines at the sales, which has brought the average selling price up considerably.

“Combines are one of the categories that depreciate very quickly. It gets past a certain point in its life and it drops much faster than say a four-wheel drive tractor or a front-wheel assist tractor,” Clarke said.

He said the combine category is growing in terms of overall numbers relative to four-wheel drive tractors and sprayers because producers in Western Canada usually need at least two of them for every one of their big four-wheel drive tractors or sprayers.

“Say a Saskatoon sale in December, we’re going to have three to one combines verses tractors. That is a trend we’ve seen year over year, and following right behind that is combine headers. If you have one combine you typically have two or three different headers for it,” Clarke said.

He said because Ritchie Brothers hasn’t seen inventory levels at their spring and summer auctions for categories of farm equipment besides combines compared to previous years that he expects some bigger sales this winter.

“I do think that at some point, whether it’s Q4 this year or Q1 next year we will see a large influx of inventory come to auction because there is still lots of inventory out there from two or three years ago,” Clarke said.

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