The agricultural machinery trade has been clawing through geopolitical debris for some time, but there may be light at the end of the tunnel, Farm Progress reports from the Farm Progress Show. "It's not bad. It's not ugly. It's not great, but it's good," said Cody Holst, general manager at auction house BigIron. "In my opinion, we've put our lows in on used equipment. The commodity prices are coming back."

Buyer behaviour has changed. Where farmers once made several purchases ahead of harvest or planting, Holst says they now research carefully and buy one machine, only when necessary, because the spare cash may not be there. "We are all in a holding pattern as farmers are trying to decide what direction to go," he said.

When they do buy, they are choosing used, said Mark See, used-equipment manager for Iowa-based dealer Van Wall Equipment, because new machines remain expensive amid trade tensions and global uncertainty. Used machines are mostly domestic, are not tariffed and are insulated from swings in adjacent markets such as energy. Van Wall's 47-machine auction at this year's show went well, See said: "We are selling more good used than we have in the past. Farmers are bringing good used to us."

See believes the used market has stabilised and is on its way up, helped by the recent turn in commodity prices. The popularity of auctions is not a sign of scarce new inventory — manufacturers are scaling back production as demand weakens — but of farmers trying to reduce risk when fertiliser costs, the Strait of Hormuz bottleneck, tariffs and weather are outside their control. "It's all about risk and managing the risk for the operator who's buying that piece of equipment," he said.

For sellers, Holst's advice is that now is a good time if the machine has been looked after: a producer who cannot afford new will hunt for good used, and well-maintained equipment will fetch a premium.

Source: Farm Progress