The Best Time to Buy Is…?

Historically, large amounts of machinery have changed hands in December. The dust of harvest has settled and, as the books close on another year, it’s a logical time to evaluate what needs to be sold, purchased, or upgraded to help manage your cash flow. 

But is December the best time to buy? 

It depends on how you define “best,” said Andy Campbell, Tractor Zoom director of insights.

“You almost have to think contrary to what other people think,” he said. “If you buy something when you’re not going to use it for a while, that tends to be the best time to buy.”

All machinery categories have seasonal spikes in demand, usually in the month leading up to when they will be heavily used. This is when prices tend to be highest, at auction and at dealerships. 

“You see premium pricing in July, December, and in March,” Campbell said. “June and August are close, too  — all times when farmers are in preparation mode, thinking about the next big season while they still have the freedom to look around for what they want and need.”

A Larger Buying Pool

January, February, April, and October often see pricing lulls, which can mean better deals but also a smaller pool of available equipment. However, with the prevalence of online auctions, it’s easier than ever to search for equipment.

“Back in the old open outcry sale days, the window was the first of November through the first of May,” said Mark Stock, co-founder of BigIron. “That has changed dramatically because now, people bid on their phone wherever they are — in the field working, in the dentist chair, sitting at their desk.”

Campbell suggested creating saved searches for your desired equipment on your preferred auction sites that can send you alerts, even when you’re busy. 

“When you’re sitting in line at the elevator or waiting for the grain cart, you can pull up that saved search and find machinery with less competition,” he said.

One reason buyers are more comfortable purchasing online, even from a distance, is because it’s not difficult to have machinery shipped. Even if it costs, say, $5,000 to ship a larger machine from several states away, you can factor that into the price you’re willing to pay and still come out ahead. Some auction sites, such as BigIron, list the seller’s contact information, so buyers can reach out directly and ask questions. 

“It shocks me the number of people who buy without calling the owner –  almost half of the time,” Stock said. “Making the call and asking those questions is important to making buyers feel more comfortable. We encourage sellers to tell the whole story. Don’t be bashful if there’s something wrong; people can handle the truth, and you’ll be rewarded for it in the long run.”

Cash Flow Matters

If you know you want to purchase or upgrade a certain piece of equipment, a discussing it with your financial adviser early in the year can be helpful. Matt Herriott, with Illinois FBFM (Farm Business Farm Management), an agriculture-based financial service provider, said you still receive the same tax benefits with a purchase in January as you do in December. 

“If a client knows they have a combine, for example, that they need to replace to be more efficient, we can sit down ahead of time and look at their cash situation and talk about financing options,” he said. A financial adviser can also help counsel you on current depreciation allowances and explain how they affect capital purchases. 

“The November to December time frame is the time of year we see many farmers looking to decrease their tax liability,” Herriott said. “It’s not necessarily their No. 1 goal, but it is a factor.”

Noticing Patterns

While there are some general guidelines when it comes to equipment supply and demand, certain types of equipment follow patterns to consider when determining the best time to buy or sell. 

Sprayers

Sales data from Tractor Zoom shows historically, the best deals on sprayers can be found in April, with prices creeping up in May and June to their peak in July. There’s a peak in March also, from sales right before the machines are needed, and a peak in December.

“April tends to be a low month, because it’s the end of a slow period where there’s no immediate use for them,” Campbell said. 

4-Wheel-Drive Tractors

Tractors tend to show less seasonality because they’re more versatile – you can use them for spring and fall tillage and planting, and on a grain cart in the fall. Lower price points tend to surface in April and September, when farmers are busy with other things and not in buying mode.

“There’s a peak in pricing in July, because that tends to be a popular month for dealer inventory reduction auctions of low-hour equipment,” Campbell said. 

Combines

Class 8 combines remain the most popular, and pricing tends to creep up steadily from January until November — with one exception. 

“July sticks out like a sore thumb,” Campbell said. “I think the reason is, again, dealer liquidation auctions. Premium buyers are looking for a good buy on low-hour machines, and that drives up a spike.”

Prices jump in November for a similar reason — premium buyers are purchasing right after harvest. Good deals can be found in January, but consider that your cash is tied up for eight or nine months until you can actually use the machine.

Headers

The most surprising thing about row crop headers, according to Campbell, is pricing doesn’t directly follow the combine market. 

“The graph is almost a bell curve from January, with a peak in March, April, May, then it slides back down into October for the low,” he said. 

Platform headers follow a more predictable pricing pattern, with March and July being peak pricing times, and May and September being lows. 

The Best Time to Buy Is …

While there are some seasonal differences to consider, the consensus is, the best time to buy — in general  — is November into early December. 

“Premium buyers are in the market as early as July,” Campbell said. “They’re going to look for exactly what they want, and pay what it takes to get it. 

“But once they’ve taken care of it, checked that box, they’re out of the market for the next month,” he added.

Postharvest, farmers and dealerships are thinking about year end and making decisions on what to sell, meaning supply tends to pick up.

“A lot of retirement sales are in November and December, and good machinery sells on those sales,” BigIron’s Stock said. “You have a better chance of getting what you want instead of waiting until right before you need it.”  

By starting your search in November instead of mid-December, you have more machines available and more time to find the right deal instead of waiting until late in the year.

“Working with an accountant or financial adviser who understands agriculture can help you buy equipment when you can capture the best deals, not necessarily in December, when you have your back to the wall,” Herriott said.