Extracted from the Farm Tender weekly Newsletter - Sign up and get the email every Wednesday morning before 6 am. www.farmtender.com.au
We have been talking about the long lead times of new Machinery for a while. It's frustrating when Farmers want a bit of kit now but have to wait in line, sometimes up to 12 months.
These supply chains have been somewhat broken for many reasons: covid, tightening of trade between Countries, Sea freight hold-ups, and increased demand due to good seasons and prices. The building industry is having similar issues getting products like timber.
This is now affecting the used Machinery market.
Farmers are reluctant to list something to sell without knowing that a replacement is parked up alongside. They literally need to have the item on Farm ready to go before they release the older version.
In the past, Farmers would more likely sell in advance, get some funds in the bank and then purchase a new item. It's a different scenario in 2021.
This is starting to play out as we move closer to the Hay and Harvest season and is no more evident than in the Chaser Bin market. Last year, Chaser Bins sales were red hot, with numerous second-hand units traded in the lead up to what turned out the be an excellent Harvest.
This year, already in July, we are starting to see that particular market tighten up.
Yes, the market for used Machinery has tightened, but it has also created a couple of opportunities for sellers. Firstly, the demand is there from buyers, so it's an opportunity to list and sell items you don't need. The opportunity is there to de-clutter and cash in.
Secondly, the price for second-hand gear has gone up, so you are receiving a better price, more often than not. We are seeing more buyers willing to pay the listed price rather than negotiate. We saw this play out in the used Tipper Trailer market last year, where a $40k Trailer in 2019 was making $50k in 2020. We anticipate this sort of scenario to play out with other segments on the market (like Chaser Bins) in the next 6 months at least.
So yes, it's probably a seller's market right now, but like in every market, buyers have limits.
Overall it's a reflection of how Agriculture is going right now. Enjoy the ride, and let's hope everyone involved can get a piece of the action.