Is There a Correlation Between New Combines Prices and Commodity Prices?

By David Davidson Posted in Agricultural Insights | In the News | IronAppraiser | IronData

September 03, 2019

Originally published in SuccessfulFarming Magazine – August 2019 It seems like the price of everything goes up doesn’t it? Commodities like corn may seem to be the exception. It’s been seven years since we’ve seen $8 corn in the peaks of 2012. But if you study the long term price trend going back to the 60’s, it becomes easy to see that in the long view this increase does play out.
Corn prices historical chart data
Corn Prices (source: Macrotrends)
We’ll come back to corn price in a minute. Let’s look instead at the trend of new selling prices of class 7 combines back to 2010. The analysis here is on the average new selling price of class 7 combines in North America from 2010 to 2018 adjusted for inflation. There are some pretty dramatic swings in the percentage price change each year on the new selling prices.

In 2012, the average selling price was a whopping 13% higher than the prior year after adjustment for inflation. Wait… wasn’t that the year corn spiked to $8? Yes it was. Some years revealed a decline in the new selling price of these combines. The average new selling price in 2016 was down 4% from the prior year. Also in 2016, the average annual corn price for the year was its lowest since 2010 at $3.60.  When you lay the annual percentage price increase over the corn price there does appear to be a correlation. New Combine Price Increase Compared to Corn Price_2010-2018 However, while commodity prices are likely a large influencer on new combine prices, there are other factors at play, too. Among the factors in the backdrop of this period were governmental factors like Tier 4 diesel engine emission requirements and changes in Section 179 write-off amounts. New features and models from the manufacturers also come with price increases. Many factors are involved, but commodity prices are very likely a large influencer on new combine prices. At the time of this writing, corn was at $4.50, levels not seen since spring of 2014. Will the price of corn hold up and if so, might we see new prices of class 7 combines on the rise again? Maybe.

Strong correlations like commodity price and new equipment price apply to used equipment values too. If farm commodity prices increase you may see the resale cash value on your ag equipment hold its value more than normal. Consider tracking the value of your equipment assets over time to spot these trends on your own assets. Check out your equipment value today and come back quarterly as factors change. Keep a record to see how the appraised values of your assets change over time. You can do this with IronAppraiser.com right here at Iron Solutions. It is based on the same data used in this analysis and provided by IronSolutions.com
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