More Signs of Farm Optimism

Farmer Iron

Last week we showed that farm dealers were upbeat, here's more information from that survey that offers insight into the price you may pay for equipme

Published on: May 29, 2012

Equipment Industry Analyst Henry Kirn, conducted the 30th survey of US. farm equipment dealers recently. Last week we ran through some of the numbers from the report talking about how dealers are pretty upbeat. This week a look at Part 2 of the survey shows that the industry is keeping a lid on inventories and prices are firming too.

In the survey more than half reported that new product prices were "firming" while only 1% saw "weakening prices" that's significant to your buying plans. Whether it's because inventories are tighter or dealers are getting more confident, you may find negotiations different than in recent months.

In the farm equipment industry, a key number to watch is used equipment inventories. Taking a lot of trade-ins but not being able to move those machines back out at a profit could be a challenge. And there is a concern over combines, however in this survey nearly half of the dealers - 47% - reported that inventories were much lower than normal or lower than normal. 24% reported higher or much higher than normal. That's a good sign for the used equipment inventory and the health of the market.

In addition dealers are reporting that used equipment prices are firming. Kirn reports the index of dealers reporting firmer prices for used is the highest measured since the survey began too.

It might not be a good sign if you're in the market for used equipment because shorter supply tends to boost prices.

And those used combines may impact new equipment sales. 67% of dealers surveyed expect used combine inventories to have a negative impact on 2013 new equipment sales, the remaining third didn't see a problem.

Everyone who follows the equipment industry - and a bunch of us are older - remembers the run-up in inventories in the 1970s and the mess that occurred in the 1980s. Looks like the industry is already looking at ways to avoid that going forward, and manufacturers are watching crop prices and demand pretty carefully.

It's a situation that bears watching.