My outlook for the 2018 used equipment market is going to be the same as 2017 to slightly better. I think good quality used equipment will sell and condition and hours will be the main seller of this equipment. The 1-5 year old stuff will be the sweet spot.
Right now, in my opinion, producers are upgrading equipment because they have to not because they want to. They are faced with large recon bills and some still have payments to make. The recon and payments will affect cashflow and may or may not address any risk management issues the producer might have. Cashflow will be the key player in the purchase or repair of equipment.
In 2018, it will be as important to educate the customer as well as the customer’s lender on equipment and how it is going to effect cashflow and manage risk. The lender needs to know and understand the market and why the equipment is going to affect the cashflow and manage the risk.
In my opinion, the segment of equipment to watch is planters. New planter sales have been so low for so long, customers are going to want to upgrade. New planter technology, whether from the factory or bolt on, will absolutely address the cashflow and risk management the customer’s lenders will be looking for.
Decreased input cost will have a positive reflection on balance sheets. I would also like to draw attention to a podcast from Rabo Bank with Sterling Liddell, titled “A Time to Evolve.” The point of the podcast is that in 2018-19 there is a large amount of equipment that will have to be addressed due to mature leases or financed notes. If you listen to Moving Iron Podcast #38 with Machinery Pete, I talk about 2017 and 2018. Also, the upcoming Moving Iron Podcast #42 with Alan Hoskins, president and CEO of American Farm Mortgage and Financial Services in Louisville, we talk about what lenders are looking for when looking at producers’ operating lines of credit. Look for Moving Iron Podcast #42 the First week of January. Also visit MovingIronLLC.com for more topics and information concerning the Equipment Market Place.