May 22, 2025 • 14 mins
In this May 2025 edition of Trends in 10, Andy Campbell breaks down what equipment dealers and ag professionals need to know right now. From tightening lending conditions and rising operating loan volumes to volatile corn market projections and policy developments affecting ethanol, this episode covers it all.
Andy digs into updated data from the Kansas City Fed and Purdue, reviews shifts in used equipment values (especially in the HHP tractor and combine categories), and explores why 2025 might signal a return to a “new normal” in farm capital investment.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:03):
Welcome everyone to another episode of Beyond the Hood with Tractor Zoom.
I'm your host, Andy Campbell, and we're doing a special Trends in 10 edition for May of2025.
Today's recording date is May 20th, which is going to be important because what we talkabout now might change in three, four days.
ah But we're going to try to talk about the everything from the plows to the policy to theeventual farm profits.
(00:30):
regardless of what happens, because there's a lot of uncertainty out there,
We are hopefully going to just enlighten you on what's going on in the ag economy and howwe see that relating into differences in farm equipment supply and values.
So I have 10 minutes and counting now and let's get going.
Uh, the first topic that we really want to hit on is actually with more of the financialside.
(00:55):
the Kansas city fed has put out a lot of great reports and one just in the last couple ofdays that I want to update you on one that they put out in
late April, believe it was, talks about non-real estate farm loan volume.
And the biggest takeaway that I saw here was the operating expenses for farms.
Obviously, you needed to put in the crop, but in the last few years, we haven't needed itnearly as much.
(01:19):
And so the year over year change, honestly, was negative all the way from mid-22 all theway to 2024.
Well, that changed in January of 2024.
to where we have now had one, two, three, four, five, almost six consecutive quarterswhere the operating expenses have been higher than the year prior.
And to add onto that though, maybe the most concerning piece here on the financial side isthat the number of loans greater than half a million dollars as a share of all loans has
(01:48):
now grown to about three and a half percent.
We haven't seen that type of numbers in that magnitude ever.
uh This graph goes all the way back to 2010.
And so we are now sadly in three years and growing in the number of just large half amillion other loans that are out there.
And I think farm equipment is partially at least to blame on that.
(02:08):
ah So is land value.
And here I want to take this back a little bit on the history side.
The same Casey fed came out with a USDA data led publication on the net farm incomegraphed with the non-irrigated farmland trend value and
We all know what net farm income has done and what it's projected to potentially do herein 2025.
(02:31):
We'll even hit on that a little bit later.
going back in the history lesson in the 1980s farm crisis, I was not this size.
And I remember my dad talking to me about it took three years for farmland values toreally go under a correction, but it only took about half that amount of time for the farm
equipment to correct itself.
(02:51):
And so again, a lot of differences between then and now.
But one of the similarities is ah
we are being pressured by interest rates, not to the extent that they were then, butthey're certainly having a bigger effect now in 25 than what they did back in 2013, 14 and
ah 15.
So that cost of capital is making a bigger difference.
And for the first time in almost seven, eight years, we are seeing farmland values dropyear over year, not so with cash rent values, but ah
(03:23):
It has been essentially three years now after the heyday and we are seeing a slightcorrection on those farmland values.
ah But we've already seen that probably almost 18 months ago.
So it looks like the time ah is, you know, history is repeating itself or at least rhymingwith those early 80s in terms of farm equipment is uh more responsive than the farmland
(03:46):
values.
Okay, one last graph that's put out by the KC Fed, and this is in their most recentpublication put out here mid-May, was the collateral requirements ah and renewal
extensions.
So for the collateral requirements needed, that has now grown almost to the level in 2025that was required back in pre-COVID eras.
(04:10):
So if you follow the graph here of the collateral requirements from lenders,
It was a little staggered, but pretty much from 2017 all the way to 2020 They had theirindex value of about 125.
Well farming times got better farmers became Had a better debt to asset ratio betterfinancials Well now the the value is about back up to that 125 that we saw back in those
(04:35):
late teen eras with farming So again, it just reinforces the the fact that we talk aboutentering into a new normal
there's certainly a lot of things going for the farm economy and it is cyclical.
ah So it's important for us to remember that we've been here before, but we are certainlyback there ah at this new normal again.
A couple of the things that uh are notable within the farm equipment and farm industryright now is the 45Z biofuel blending tax credit extension.
(05:03):
It hasn't been signed into law, but it did ah go through the House Ways and MeansCommittee that modified the 45Z tax credit for biofuels.
It's just an important uh signal that this in some shape or form will likely continuegoing forward.
So that's a positive on the corn demand side of probably a negative not to get anythingtoo political, but the Iowa Senate did restrict the use of eminent domain for carbon
(05:28):
pipelines.
That's important for everybody outside of just Iowa because that was really required totake a lot of the ethanol, the carbon dioxide from the ethanol.
pipe it up to the Dakotas and uh essentially make corn and ethanol viable for SAF use.
And that looks to be stalled depending on what the governor of Iowa does uh in terms of aveto and no veto.
(05:55):
Okay, a couple other things in a near term US farm economic outlook, corn market, ifyou've seen that it's stagnant and uh meh at best.
But really, there's reasons behind that.
um You know, we have
Reported to have planted 95.3 million acres here in the United States uh and with atrendline yield of 181 bushels, which would be a record this is Having the potential to
(06:20):
put out a record corn crop obviously record corn crop brings in better profitability butwith a record corn crop it brings in a real likely big hit to the corn market reducing
profitability and so ah It could go one of either ways if we have a great growing seasonacross the United States which planting progress for the most part
has been good.
(06:40):
are set up to succeed and have a huge crop.
ah But we are also susceptible ah to a drought in many different areas.
And so if that were to happen, you know, the corn market would probably rallysignificantly.
And, and we might see some good, great values in certain areas, great profitability incertain areas and great equipment demand in some certain areas.
(07:04):
But time will tell.
And again, with corn,
you're really looking at the month of July, we'll be watching the weather forecast thereto see if rain truly makes grain ah in that sense.
ah A couple of things that Purdue did put out there, farmer sentiment and maybe even acounter intuitively that the farmer sentiment for farm capital investment did increase in
(07:24):
the month of April.
This is taken after the tariff announcement.
So it was at least it appears that it was largely positive.
But I will say that when you grab that farm capital investment index,
right over our tractors and row crop data, tractor auction values, you see this broken outinto a period of three different stories.
Really you've got from 2016 when they started this investment index all the way to almostto 2020, you've just got a stagnant farm economy, stable supply, and because the farm
(07:54):
economy is stagnant, you just see those row crop values dropping year over year, monthover month, not significantly, but it was just putting downward pressure on those overall
values.
Then you have 2020, you know, the whole host of issues that hit with the pandemic and theRussian invasion of Ukraine.
That really sent the commodity markets into a tailspin.
(08:16):
Equipment prices shot up.
It was a great time to buy equipment because everybody had so much cash, which then withthe supply chain hitting right after that, too much cash chasing too few of goods.
Equipment creates inflation.
And then the the investment index plummeted because the rising values
And you can see that in this next period, the value of used equipment just shot up whilethe investment index dropped from Purdue really kind of bottomed out and they've been
(08:42):
sitting around in their index form somewhere in the thirties or low forties for a numberof years.
Well, that has climbed back up largely here in 2025.
And at the same time, supply is now returned.
And this is the third period I was talking about when you have ample supply, lowprofitability, the reverse happens.
and you're getting a bit of a deflation at least on those used equipment values and acorrection.
(09:07):
Now that that farm capital investment index from Purdue is hovering around that 60 whereit was back in you know 2016 to 20 almost early 2020 those auction values have returned to
about those 2016 to 2020 time frame and so I think the important takeaway here similar towhat we saw with the
(09:30):
the financial indices that I was showing you earlier is that we've appeared to come closeto what is a new normal and new expectation within this used equipment market.
Not that we're not going to continue to see fluctuations, which I'll talk about,especially in row crop tractors and four wheel drive market.
But I think ah that having the time or the frame of mind that we are in a new normal, butwe have been here before in a similar situation ah is encouraging, especially when you
(09:56):
think about investments for your dealership and helping farmers prepare.
for the future.
overall supply, demand and sales.
We know that the value of new equipment does continue to ratchet up and this is going tocontinue to cause a little bit of strain on some farmers because 4 % of a half a million
dollars is a whole lot more than 4 % on $200,000.
(10:18):
And so that along with potential supply chain disruptions that we are likely gonna seelater this summer could drive more users to focus on that used equipment.
which again will likely tighten up the supply because of the higher demand and raiseequipment values later in the year or in 2026.
But there's a massive caveat again with the commodity markets that we talked about and theoverall ah just demand tariffs.
(10:46):
So much of that stuff that not only could change in the next six months, but it couldchange in the next six days.
Okay, overall, I want to hit on a few high value equipment categories because how am Idoing on time?
I'm over 10 minutes, but bear with me here and I'll be brief.
Let's at least talk about the highest value of equipment out there.
(11:08):
400 plus horsepower tractor supply.
We're seeing a supply increase on that 38 % year over year.
We are seeing that plateau a little bit since the fall time period, but there's
some headwinds.
think we're going to see some trade ins this summer that will continue to push that inthat supply up seasonally and without any big shift in the corn market.
(11:30):
ah I don't know if we are going to get a stronger demand.
So I'd expect this market to be under continued pressure at least throughout the end ofthe summer.
We've already seen an 11 % drop year over year on these high horsepower tractors atauction.
And so either stabilization or a likely um
(11:50):
continued drop in value.
A little bit of this does depend on the volume of dealership auctions that we see thissummer.
If we see the auction volume in 25 that we saw in the summer of 24, then that's going tosuppress those auction values even further.
But a good caveat to this, we have not seen on our Tractor Zoom Auctions success team, theamount of dealership auctions coming through and being planned for.
(12:16):
So there probably will be some, there certainly will be some.
just probably less than what we saw in the summer of 2024.
And a couple other points to hit on.
You know, we talked about the heavy horsepower tractors.
Let's give a little bit of a brighter take and talk combines, at least class eightcombines, because it is a different story.
(12:39):
All of last year, we talking about the high supply and trying to get that under control.
Well, kudos to you guys.
You have done it, at least from...
April of 24 to pre-plant April of 25, we only saw a 3 % increase on the overall amount ofClass 8 combines that are out on the used equipment market.
So that part of the variable has stabilized.
(13:00):
Obviously the demand is a little bit lower right now.
So while values that we've seen this spring might have been a little bit lower than whatthe values were in the spring of 24, they are currently above the values that we saw going
in the June, July, August time period.
But again, there was a heavy amount of dealer reduction inventories, a lot of volume ofthose, especially those S780s that hit the market then.
(13:24):
And so if that tide can be stemmed, I think that we're probably gonna see a higher averagevalue on classic combines for the remainder of 2025 than we did see on 24, even despite
the challenging corn market.
But like we mentioned, there are so many variables out there yet.
So stay tuned to those.
Stay tuned to TractorZoom.com, our trends in 10, plus we'll be putting out
(13:46):
a fair amount of content each month, trends also on dealer efficiency and sales enablementplatforms.
So TractorZoomPro.com, you can follow us on all the social channels and I appreciate youfor sticking with me for a few extra minutes on this episode of Beyond the Hood with
Tractor Zoom Trends in 10.
Take care everybody, see you later.
Welcome everyone to another episode of Beyond the Hood with Tractor Zoom.
I'm your host, Andy Campbell, and we're doing a special Trends in 10 edition for May of2025.
Today's recording date is May 20th, which is going to be important because what we talkabout now might change in three, four days.
ah But we're going to try to talk about the everything from the plows to the policy to theeventual farm profits.
(00:30):
regardless of what happens, because there's a lot of uncertainty out there,
We are hopefully going to just enlighten you on what's going on in the ag economy and howwe see that relating into differences in farm equipment supply and values.
So I have 10 minutes and counting now and let's get going.
Uh, the first topic that we really want to hit on is actually with more of the financialside.
(00:55):
the Kansas city fed has put out a lot of great reports and one just in the last couple ofdays that I want to update you on one that they put out in
late April, believe it was, talks about non-real estate farm loan volume.
And the biggest takeaway that I saw here was the operating expenses for farms.
Obviously, you needed to put in the crop, but in the last few years, we haven't needed itnearly as much.
(01:19):
And so the year over year change, honestly, was negative all the way from mid-22 all theway to 2024.
Well, that changed in January of 2024.
to where we have now had one, two, three, four, five, almost six consecutive quarterswhere the operating expenses have been higher than the year prior.
And to add onto that though, maybe the most concerning piece here on the financial side isthat the number of loans greater than half a million dollars as a share of all loans has
(01:48):
now grown to about three and a half percent.
We haven't seen that type of numbers in that magnitude ever.
uh This graph goes all the way back to 2010.
And so we are now sadly in three years and growing in the number of just large half amillion other loans that are out there.
And I think farm equipment is partially at least to blame on that.
(02:08):
ah So is land value.
And here I want to take this back a little bit on the history side.
The same Casey fed came out with a USDA data led publication on the net farm incomegraphed with the non-irrigated farmland trend value and
We all know what net farm income has done and what it's projected to potentially do herein 2025.
(02:31):
We'll even hit on that a little bit later.
going back in the history lesson in the 1980s farm crisis, I was not this size.
And I remember my dad talking to me about it took three years for farmland values toreally go under a correction, but it only took about half that amount of time for the farm
equipment to correct itself.
(02:51):
And so again, a lot of differences between then and now.
But one of the similarities is ah
we are being pressured by interest rates, not to the extent that they were then, butthey're certainly having a bigger effect now in 25 than what they did back in 2013, 14 and
ah 15.
So that cost of capital is making a bigger difference.
And for the first time in almost seven, eight years, we are seeing farmland values dropyear over year, not so with cash rent values, but ah
(03:23):
It has been essentially three years now after the heyday and we are seeing a slightcorrection on those farmland values.
ah But we've already seen that probably almost 18 months ago.
So it looks like the time ah is, you know, history is repeating itself or at least rhymingwith those early 80s in terms of farm equipment is uh more responsive than the farmland
(03:46):
values.
Okay, one last graph that's put out by the KC Fed, and this is in their most recentpublication put out here mid-May, was the collateral requirements ah and renewal
extensions.
So for the collateral requirements needed, that has now grown almost to the level in 2025that was required back in pre-COVID eras.
(04:10):
So if you follow the graph here of the collateral requirements from lenders,
It was a little staggered, but pretty much from 2017 all the way to 2020 They had theirindex value of about 125.
Well farming times got better farmers became Had a better debt to asset ratio betterfinancials Well now the the value is about back up to that 125 that we saw back in those
(04:35):
late teen eras with farming So again, it just reinforces the the fact that we talk aboutentering into a new normal
there's certainly a lot of things going for the farm economy and it is cyclical.
ah So it's important for us to remember that we've been here before, but we are certainlyback there ah at this new normal again.
A couple of the things that uh are notable within the farm equipment and farm industryright now is the 45Z biofuel blending tax credit extension.
(05:03):
It hasn't been signed into law, but it did ah go through the House Ways and MeansCommittee that modified the 45Z tax credit for biofuels.
It's just an important uh signal that this in some shape or form will likely continuegoing forward.
So that's a positive on the corn demand side of probably a negative not to get anythingtoo political, but the Iowa Senate did restrict the use of eminent domain for carbon
(05:28):
pipelines.
That's important for everybody outside of just Iowa because that was really required totake a lot of the ethanol, the carbon dioxide from the ethanol.
pipe it up to the Dakotas and uh essentially make corn and ethanol viable for SAF use.
And that looks to be stalled depending on what the governor of Iowa does uh in terms of aveto and no veto.
(05:55):
Okay, a couple other things in a near term US farm economic outlook, corn market, ifyou've seen that it's stagnant and uh meh at best.
But really, there's reasons behind that.
um You know, we have
Reported to have planted 95.3 million acres here in the United States uh and with atrendline yield of 181 bushels, which would be a record this is Having the potential to
(06:20):
put out a record corn crop obviously record corn crop brings in better profitability butwith a record corn crop it brings in a real likely big hit to the corn market reducing
profitability and so ah It could go one of either ways if we have a great growing seasonacross the United States which planting progress for the most part
has been good.
(06:40):
are set up to succeed and have a huge crop.
ah But we are also susceptible ah to a drought in many different areas.
And so if that were to happen, you know, the corn market would probably rallysignificantly.
And, and we might see some good, great values in certain areas, great profitability incertain areas and great equipment demand in some certain areas.
(07:04):
But time will tell.
And again, with corn,
you're really looking at the month of July, we'll be watching the weather forecast thereto see if rain truly makes grain ah in that sense.
ah A couple of things that Purdue did put out there, farmer sentiment and maybe even acounter intuitively that the farmer sentiment for farm capital investment did increase in
(07:24):
the month of April.
This is taken after the tariff announcement.
So it was at least it appears that it was largely positive.
But I will say that when you grab that farm capital investment index,
right over our tractors and row crop data, tractor auction values, you see this broken outinto a period of three different stories.
Really you've got from 2016 when they started this investment index all the way to almostto 2020, you've just got a stagnant farm economy, stable supply, and because the farm
(07:54):
economy is stagnant, you just see those row crop values dropping year over year, monthover month, not significantly, but it was just putting downward pressure on those overall
values.
Then you have 2020, you know, the whole host of issues that hit with the pandemic and theRussian invasion of Ukraine.
That really sent the commodity markets into a tailspin.
(08:16):
Equipment prices shot up.
It was a great time to buy equipment because everybody had so much cash, which then withthe supply chain hitting right after that, too much cash chasing too few of goods.
Equipment creates inflation.
And then the the investment index plummeted because the rising values
And you can see that in this next period, the value of used equipment just shot up whilethe investment index dropped from Purdue really kind of bottomed out and they've been
(08:42):
sitting around in their index form somewhere in the thirties or low forties for a numberof years.
Well, that has climbed back up largely here in 2025.
And at the same time, supply is now returned.
And this is the third period I was talking about when you have ample supply, lowprofitability, the reverse happens.
and you're getting a bit of a deflation at least on those used equipment values and acorrection.
(09:07):
Now that that farm capital investment index from Purdue is hovering around that 60 whereit was back in you know 2016 to 20 almost early 2020 those auction values have returned to
about those 2016 to 2020 time frame and so I think the important takeaway here similar towhat we saw with the
(09:30):
the financial indices that I was showing you earlier is that we've appeared to come closeto what is a new normal and new expectation within this used equipment market.
Not that we're not going to continue to see fluctuations, which I'll talk about,especially in row crop tractors and four wheel drive market.
But I think ah that having the time or the frame of mind that we are in a new normal, butwe have been here before in a similar situation ah is encouraging, especially when you
(09:56):
think about investments for your dealership and helping farmers prepare.
for the future.
overall supply, demand and sales.
We know that the value of new equipment does continue to ratchet up and this is going tocontinue to cause a little bit of strain on some farmers because 4 % of a half a million
dollars is a whole lot more than 4 % on $200,000.
(10:18):
And so that along with potential supply chain disruptions that we are likely gonna seelater this summer could drive more users to focus on that used equipment.
which again will likely tighten up the supply because of the higher demand and raiseequipment values later in the year or in 2026.
But there's a massive caveat again with the commodity markets that we talked about and theoverall ah just demand tariffs.
(10:46):
So much of that stuff that not only could change in the next six months, but it couldchange in the next six days.
Okay, overall, I want to hit on a few high value equipment categories because how am Idoing on time?
I'm over 10 minutes, but bear with me here and I'll be brief.
Let's at least talk about the highest value of equipment out there.
(11:08):
400 plus horsepower tractor supply.
We're seeing a supply increase on that 38 % year over year.
We are seeing that plateau a little bit since the fall time period, but there's
some headwinds.
think we're going to see some trade ins this summer that will continue to push that inthat supply up seasonally and without any big shift in the corn market.
(11:30):
ah I don't know if we are going to get a stronger demand.
So I'd expect this market to be under continued pressure at least throughout the end ofthe summer.
We've already seen an 11 % drop year over year on these high horsepower tractors atauction.
And so either stabilization or a likely um
(11:50):
continued drop in value.
A little bit of this does depend on the volume of dealership auctions that we see thissummer.
If we see the auction volume in 25 that we saw in the summer of 24, then that's going tosuppress those auction values even further.
But a good caveat to this, we have not seen on our Tractor Zoom Auctions success team, theamount of dealership auctions coming through and being planned for.
(12:16):
So there probably will be some, there certainly will be some.
just probably less than what we saw in the summer of 2024.
And a couple other points to hit on.
You know, we talked about the heavy horsepower tractors.
Let's give a little bit of a brighter take and talk combines, at least class eightcombines, because it is a different story.
(12:39):
All of last year, we talking about the high supply and trying to get that under control.
Well, kudos to you guys.
You have done it, at least from...
April of 24 to pre-plant April of 25, we only saw a 3 % increase on the overall amount ofClass 8 combines that are out on the used equipment market.
So that part of the variable has stabilized.
(13:00):
Obviously the demand is a little bit lower right now.
So while values that we've seen this spring might have been a little bit lower than whatthe values were in the spring of 24, they are currently above the values that we saw going
in the June, July, August time period.
But again, there was a heavy amount of dealer reduction inventories, a lot of volume ofthose, especially those S780s that hit the market then.
(13:24):
And so if that tide can be stemmed, I think that we're probably gonna see a higher averagevalue on classic combines for the remainder of 2025 than we did see on 24, even despite
the challenging corn market.
But like we mentioned, there are so many variables out there yet.
So stay tuned to those.
Stay tuned to TractorZoom.com, our trends in 10, plus we'll be putting out
(13:46):
a fair amount of content each month, trends also on dealer efficiency and sales enablementplatforms.
So TractorZoomPro.com, you can follow us on all the social channels and I appreciate youfor sticking with me for a few extra minutes on this episode of Beyond the Hood with
Tractor Zoom Trends in 10.
Take care everybody, see you later.
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
Ridiculous History
History is beautiful, brutal and, often, ridiculous. Join Ben Bowlin and Noel Brown as they dive into some of the weirdest stories from across the span of human civilization in Ridiculous History, a podcast by iHeartRadio.