Farmers scour auctions for harvest equipment

By Mark Weinraub

MACKINAW, Illinois (Reuters) - The price was higher than Bill Boyd wanted to pay and still rising, but it didn't really matter. He needed a combine harvester.

He lost most of his farm equipment to fire when lightning struck his shed earlier this year, leaving him no way to harvest his part of what could be the most valuable crop in U.S. history.

So Boyd, who grows corn, soybeans and wheat on 1,000 acres in Rushville, Illinois, joined about 150 others in this small town in central Illinois to bid on the used equipment of retiring farmer John Kuhfuss. And the prices were high.

Even with grain prices at record levels, farmers frequently favor used equipment, especially when, like Boyd, they need it in a hurry.

New tractors, combines and planters take months to acquire because manufacturers build them to order. High metals prices make it too expensive to keep them in stock.

"It is probably the best year on record," said Eldred Nehmelman, the auctioneer who sold off Kuhfuss' equipment. "The average combine would bring $10,000 more (than it did a year ago)."

The used equipment also is in great demand because the number of farm auctions are down this year, leaving few opportunities for farmers to replace their worn out equipment.

Nehmelman, who has been running farm auctions for 30 years, said that some older farmers were putting off retirement for a year or two so they could take advantage of the strong cash prices for grain.

Rising demand from countries such as China and India and a growing biofuel sector have provided new outlets for U.S. farmers to sell their crops and supported prices for the past two years.

This year, slow planting due to a cold and wet spring and flooding that left millions of acres of Corn Belt farmland underwater fueled a rally that sent both corn and soybean prices to record levels.

The prices are a boon to farmers who are seeing rising costs for key inputs such as fuel and fertilizer eat into their profits.

Demand for new equipment is up too, according to John Deere, the world's largest maker of tractors and combines, and others. But high commodity prices are a double-edged sword for Deere, which has said steel costs were eating into profits.

KICKING TIRES

At the Kuhfuss sale, some farmers were looking for large equipment such as a planter or a tractor to expand their operations and capitalize on high grain prices. Others just need some small tools like a saw or a shovel.

Potential buyers arrived early in the morning to inspect the merchandise, climbing into the cab of a tractor, kicking the tires of a planter, before deciding if they wanted to make a bid.