In this episode of Gear Up with BigIron, Mark and Ron Stock discuss the wild ups & downs of the current market. From commodities to real estate, we take a look at pricing forecasts for crucial goods and farming equipment, as well as the ever-shifting demand for prime property options. If you're looking to buy or sell anything big in the near future, this episode is for you!
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Transcript:
Mark Stock 00:19
Well, hello everybody. Welcome to Gear Up by BigIron. My name is Mark Stock, and we're doing a podcast. My guest today, Ronald Stock, is here, and we're going to talk about a bunch of fun stuff, particularly, you know, gearing up for harvest this fall, that's coming right around the corner. But before we get to that, Ron Stock, it's getting close to one of my favorite times of year, and that's football season. Now the kids are going back to school. I've got a senior this year, Nicholas, who plays football. He's been going to two a days, and he loves football. He's a whole whopping five foot, five and 110 pounds, soaking wet, but he loves all that contact. You know, he loves it. He's a running back, and he gets pancaked all the time because he's small and he's a senior, but he keeps getting up, and me and my wife were just praying to God that he just stays healthy all season, because he loves it so much. But football season, you got a favorite team?
Ron Stock 01:20
You know, my wife's a huge football fan. She loves the Nebraska Cornhuskers. She loves the Kansas City Chiefs. I like every team, whatever state I'm in. I like that team, but I'm in sales. You know, you like the Minnesota Vikings. I like the Minnesota Vikings, but, yeah, I follow. I go to the Nebraska football games. You know, used to go to one Nebraska game a year, and then when you started that tailgate up, you know, 10, 20-15, years ago. I remember the conversation years ago. Mark Stock does a tailgate. That's unbelievable. I remember the conversation. He says, Ron, we're going to do a tailgate. And I said, Brother, you're on that one all on your own. Because I said, that is a tremendous undertaking. And you got to be married to a football game every Saturday. And so it has been tremendous. I think one game you serve like 900 people and Mark does it over the top. I'm talking about three, four course meal. You know, if I was in charge of it, I would have some really high quality hot dogs, and
Mark Stock 02:22
then make a high quality hot dog
Ron Stock 02:23
They do.
Mark Stock 02:24
Which one is it? I'd like to know
Ron Stock 02:26
Whimmers. Stop by. You get a whimmers hot dog? No, there's lots of good hot dogs out there, but definitely I would have a roaster full of the best hot dogs money can buy and a bun and some ketchup and maybe some, maybe some cake. But all those, all that stuff you do is way over the top. If you folks haven't been to a Mark Stock BigIron tailgate, you need to go. We're trying to get pulled off to have a live band for the Nebraska Colorado game. That's a seven o'clock kickoff game in the evening. So we will have, if the weather is okay, yep, we will have a live band in our space for that event, and it's going to be an all day deal. We've got people coming from all over because, you know, that's one of the big games this year. So if you hear this, and you're going to that football game, even if you don't have tickets to the game, because you can't get tickets to the Nebraska, Colorado game right now. They are extremely expensive because of they call it a rivalry. It's not really a rivalry. It's just kind of like an event, right? But if you're not going to go to the game, you can still come on out. We'll have the big screen TV up and you can watch it that way. You can cute story. I was helping my kids a month ago or so, hauling some corn out on the weekend, the Fourth of July weekend, and it rained, and I'm not a real professional truck driver, so I got stuck at six o'clock in the morning because I wanted to get to bed, and I'll plant early to unload and try to get two or three loads. You got stuck in the mud. I got stuck. Okay, so I'm stuck in the mud, and it's six o'clock and I'm trying to call somebody, and I'm at the bottom of the hill. There's no cell service. I'm climbing to the top of the grain bin, you know, to see if I can get any bar on my cell phone, like the National Lampoon's.
Mark Stock 04:12
I'm I'm can not get nothing. I look off in the distance because I'm on top the grain bin, I could see a half a mile away, and there's an object coming to me. And I went, who in the hell's out here at six o'clock in the morning, except me, stupid me, you know, out by myself. Here comes the old motor grader, the county motor grader. Guy comes popping over the hill. And I went, this is the save of my life here. And I stand in the middle of the road. I said, he stops. He says, you need some help. I said, I'm stuck. I said, you got a log chain? He goes, Yeah, I do. I said, Can you back up and pull me out? He goes, I can try.
Ron Stock 04:44
Wow, you run into a good guy. Normally, they say, the county says, I can't. I'm not allowed.
Mark Stock 04:49
The story gets better. So we're backing up. He's backing up. He's got this chain that is the size of a, I mean, it's not a three inch chain. It's bigger than that. It's like an
Ron Stock 04:59
Overkill
Mark Stock 05:00
Like a 916, five, eight, I don't know it's a huge chain that, I mean, you could pull out a tank with the thing. Anyway, back, I hooked it up to the back of the trailer by the frame, because I didn't want to spring the frame or nothing, because it was loaded. I had 1000 bushels of corn on there. Dangerous, yeah, and it was all it was just slippery, it was greasy, right? And he tugged me on out, and it would took five minutes. He got me to the middle of road. Everything was good. So walk up, I said, Hey, what do I owe you? He said, Do you recognize who I am? And I looked at him a little closer, and I went, Well, yeah, your face looks familiar. He goes, I'm at every one of your tailgates. You don't owe me anything. I went, Oh, that was cool. So yeah, thanks, Ron Melcher for that, and you helped me out there. That was good, yeah. But anyway, hey, we're supposed to be talking about, yeah, we're on a mirror. We need to be talking about, you know, what's going on in the auction industry right now, both land and machinery. And we just come back from Minnesota here, from Farm Fest and good crowds. And, you know, people are concerned because commodity prices, they've been fluctuating in the wrong direction, mostly this year. And they're wondering, how are, how are these prices affecting machinery and land? So I'll start off throwing you Ron Stock, the real estate broker here on the BigIron real estate division. What are you seeing going on in the land market?
Ron Stock 06:21
Well, we've put in our tops, you know, in the land prices. So we're not seeing it go down
Mark Stock 06:27
Till the new top.
Ron Stock 06:28
Well, we put in our top right now tentatively. So the land has just been going up, up up. In my career, I've seen the land go down three times, so this will be the fourth time. I'm sure it's coming. I'm not a naysayer. I'm just looking at the economics of it. Corn is down. Interest is up. The reason that land has not gone down yet is because there's not a lot of it for sale. But what'll happen? And I'm guessing, just like you are, just like our listeners are, we're all guessing. But I am coming to you with some experience. The reason the land is keeping its price at the top is because there's not a lot of land for sale. But come this fall or this spring, here's what happens. People are followers. You know, they're like, we're like, cattle. We just start see the lead cow go out, and we follow that lead cow right to the pasture, right to the water. So you're going to see and we're seeing some more lands come to the market this fall. We're seeing it. Our sale calendar is filling up, not full, but not as many farms as we've sold in other years, but it's definitely getting more robust. And as soon as the public, the landowners, hear that land's gone down 5% they will come in droves. That's what they did. The other times they said, I want to sell my land. I still want 10,000 an acre. Can you give me 10,000 acre? I knew I should have sold it. I'm 72 years old. I always said I was going to sell it. The next time it went up, did I miss it? I go, you miss it? But not by much. It's only bringing 5% less than it was a year ago. And there's going to be a lot of land on the market when the thing goes down a little bit, and I don't look for land to drop out of bed, more than, I'm guessing, again, 10% but it's definitely put in its highs, in my opinion. And it's not an economic rocket scientist that can figure that out. Corn, you know, is down to $4.25 a bushel at the ethanol plants, 430 it's been going down. Today, it's up three by the way, which is refreshing change. And so the interest is up, but it's starting to stabilize. And you know, there's not going to be a lot a lot of people panic selling their land, but if you're thinking about selling your land, it's time to start a conversation. You know, it's hit its highs. It's peaked out. It's going back off, a little bit level off. Right now, I think we're in the level stage. And give us a call. The best thing you can do with your land is expose it to the market. On our last land auction, we had nine states bid on it. We had 192 bids combined on three tracts. And people call me up and they say, Why in the world did nine states bid on the land? They've always got a story. Well, I'm from Butler County, Nebraska. My grandparents were and I moved to California, and I hit it big in Silicon Valley, and I've always wanted to pass on a farm to my kids, and this farm is about three miles from where my grandparents was and I'm gonna buy it. And so they got stories like that. They've got tenants in the area who told them, buy me a farm and I'll rent you a farm. But I ain't kidding you. I've got some great stories for another time, sold a farm recently to a guy from Hawaii, and he bought a farm in Baca County, Colorado. I said, Why did you buy that farm? He goes, my grandparents own a farm about 16 miles from there, and I've done really good in Hawaii. I'm in construction, and I bought that farm, and he said, I could have never bid on it if it wasn't on BigIron. And first of all, he's a construction guy, so he's been watching the equipment auctions, which is really a crux to why we get the bidders on our real estate because people buy 10,000 tractors to one farm.
Mark Stock 10:06
10,000 tractors sold to a handful of farms
Ron Stock 10:09
People buy 10,000 pieces of machinery to one farm. So really, the BigIron equipment side, which you're going to address, the equipment sales in a little bit. They are the honey that baits people to our website. I remember being in St. Ed Nebraska, our hometown, as a pretty new real estate broker, and this guy come in end up being a good friend of mine, and he said, Ron Stock, I want to sell that farm at the six mile corner. This side of six mile corner. We've sold that farm three times in my career, by the way, but the very first time we sold it, the guy come in and says, Ron Stock, how many? How many people are you on your mailing list? And I remember sitting up in my chair because I had just counted them, 740 and I was very proud of that number in the 19 late 1980s 740 and now we're exposing it to. Oh my gosh. I mean it the numbers just blow my mind. How many people get to see when we sell a farm
Mark Stock 11:06
Just under a million
Ron Stock 11:07
Yes, well, it's growing like, Was it like 2000 a week? The bidder base, here's, Here's, here's. The amazing thing to me about BigIron is 60% of the people that go to our website are first time users. That statistic always excites me. You know, sure, it's great to have we love to have the people back and back again. But folks, think about that, 60% of our bidders are new to the website. That's freaking an unbelievable statistic to me. I'd really like to drill down on it and see that why that is, but we are getting to the new bidders and buyers, and it's growing exponentially. So things are good on the real estate side of the company. If you're thinking about buying a farm, give us a call. If you're thinking about selling a farm, we really need to talk to you. We got plenty of buyers.
Mark Stock 11:13
On a slow week Well, the sellers that we have right now in the real estate market are usually those that are inheriting a farm. You know, mom and dad have passed, and they're in their you know, the kids are in their 50s or 60s, and maybe even their 70s, because some of these folks, you know, with medicine, everything, they're living it well into their 90s. And when they when they pass away, the kids inherit the farm, or they inherit the trust, and they're the trustees of the farm, and they figure, why do I want to own it with my brother and my and my sister if something happens to me or them now I'm a partner, or they're a partner with my children. And it gets pretty convoluted. So those are a lot of the lot of the people were selling for.
Ron Stock 12:36
It makes sense to Mark Stock the person that sells the farm that never worked the land. You know, they're the like the people inherited it. Explain to them it's a good investment. It'd be good if you kept it, but if you need to sell it, sell it.
12:47
Well, today it's a little different, because you can sell that farm, and I'll just throw out a number of $10,000 an acre farm, you can go to a number of lending institutions. They'll give you five, maybe even five and a half percent interest on that money. So if you got 10,000 acre, and it's 5% interest, that's $500 an acre, you're going to get and you don't have to pay the real estate tax. So if you're thinking about selling, that's a reason why you should be selling. Now, if I'm a buyer Ron Stock, what's the converse of that? Why would I be paying $10,000 an acre. And if I if I have to borrow a percentage of the money and pay 7% to 8% depending on where you go, why would that be a good investment for a buyer?
Ron Stock 13:31
I just sat last night at the Boone County races with a really smart young man. His name is Eric, and you know him very well, Mark Stock, but he was explaining to me the same thing. He goes, Why would I buy a farm and pay 8% interest? That interest is more than the farm will make. I go, well, the guys that buy the land think about it differently. And here is the here is the the equation you take the price times eight and a half percent. That's the way it was when I was really paying attention, in the 90s and early 2000s and that is your land payment. So a million dollar farm times eight and a half percent, it's 85,000 that 85,000 is your land payment. Don't think about it, Eric, as you're paying 8, 80,000 interest, because that's not the way it works. And I said, you really need I don't understand the way it works. I just understand how it works. That farm times 8.5 will almost always be pretty dang close to your land payment. Now it used to be less when interest was only three and 4% you could take it times like 6.5 so I said. And then, so why should I still buy it? He asked me, I go because 20 years from now, that farm you're buying for 9000 an acre is going to be 19,000 an acre. History shows it goes up
Mark Stock 14:44
6% a year since over the 40 year run, it's been 6%
Ron Stock 14:47
It has its backups, has its ups and downs. But I tell people all the time. I told one of the sisters few years back, they said, Hey, we've been working hard, you know, working our regular jobs, and we got 50 and 75,000 saved up. It. What should we do with that money? And I said, buy some real estate with it, and you don't have to buy a farm. So one of the sisters bought the house across the street. Used the 50, 75,000 to finance it, and it was renting for 1500 a month. Now fast forward, four years later, that house that they paid 300,000 for is worth 425 they're renting it for 2500 a month, and it's an inflation beater. So folks out there, if you want to have something when you retire, buy some real estate. Buy a farm, buy a rental house down the street, buy a commercial property. But real estate is always been, always been, the difference between the haves and the have nots. So we're going to be, as we mentioned here this week in Dakota fest, and we'll be at Farm Progress in Boone, Iowa, here at the end of August. We'll be at the Big Iron Farm Show in Fargo, North Dakota, in that second week, I believe it is in September, and then at Husker Harvest Days. And a lot of people come by and ask us these questions on real estate, when's a good time to sell, when's a good time to buy? So that's going to be a great opportunity to speak with some of the real estate people that we have at those shows. And we're also going to have some of the equipment reps there now in the Boone Iowa show Ron Stock, Van Wall, which is one of the largest John Deere dealers across the state of Iowa. They're going to have a special, huge sale. I think there's over 200 pieces of late, late model John Deere machinery that will sell in conjunction with the Farm Progress Show and during Husker Harvest Days. In fact, we're going to have a Husker Harvest Days featured auction, and we'll have a lot of the equipment on display around Grand Island that it will be selling during that time period. But we're seeing quite a bit of late model equipment now being sold specifically from implement dealerships, and we're seeing that because of the boomerang effect from covid. Okay, so covid, nobody could get anything if you had something, prices were higher than heck. A lot of implement dealers put in a lot of orders. The factory lines got running. All the machinery come in. A lot of people had new orders in for new stuff because they couldn't get anything when covid happened, they took possession of the new equipment and they took in a glutton of low houred, late model used machinery, and their yards are just full right now. And the machinery, in many circumstances, has backed off a little bit combines. Hey, don't say a number. Don't say a number. I'm right on my hand. I know you study the market big time. So I'm going to ask you how much combines have went down. I want to see if I'm close. Don't look.
Mark Stock 17:42
Well, it depends. Do you want to talk a percentage? Or you want to talk a percentage?
Ron Stock 17:44
I'm talking a percentage. How much I wrote down my hand, how much I'm just guessing. You study the numbers, how much Mark Stock have combines gone down a five year old or newer machine?
Mark Stock 17:54
Well, a two year old machine will bring $100,000 less today than it would a year ago.
Ron Stock 17:58
So if it's 500,000, 100,000 less, it'd be 20% less.
Mark Stock 18:02
I'd say it's about 18 to 20% on a lot of the machines. If it's -
Ron Stock 18:06
I wrote down 20
Mark Stock 18:07
Unless, if you're having a retirement sale, a retirement sale, they're holding a little bit better. Because, for some reason, the way of the market an end user farmer will always support a farmer retiring more than they support somebody else. I mean, even though they are good friends with their implement dealership or their infamous dealership salesperson, they will support an end user farmer, will support a retiring farmer more than they'll support a dealer, and that has always been that way.
Ron Stock 18:35
So tractors. What are tractors? Going down?
Mark Stock 18:37
Tractors?
Ron Stock 18:38
Late model tractors
Mark Stock 18:40
You know the four wheel drive tractors, believe it or not, have held pretty steady a mechanical front tractor, maybe 7 to 10%
Ron Stock 18:46
I wrote down 10.
Mark Stock 18:49
A John Deere 4440 Okay, a 1982 model. John Deere 4440 during the peak of covid was bringing 35,000 they've settled back maybe to the upper 20s, lower 30s. We're not going to we have not seen the machinery go back to post covid, pre covid.
Ron Stock 19:04
It's not gonna happen. Why Mark Stock is gonna happen?
Mark Stock 19:07
Inflation.
Ron Stock 19:07
John Deere is charging a lot of money for a
Mark Stock 19:10
19% they went 19% up. That was last year.
Ron Stock 19:14
That brings a used machinery up.
Mark Stock 19:15
That was 2023 number. They increased all the prices 19% I don't know what they're doing this year. I haven't seen that, but, and, but, but if you want to buy a machine right now for your fall harvest operation, don't be scared to do it.
Ron Stock 19:31
Time to buy
Mark Stock 19:32
Time to buy, because we've seen a little bit of a correction in the market. We've seen some areas get plenty of rain, and the way you beat low commodity prices is you have to yield it out of it. You have to yield out of it. So and if that's one thing that all of us farmers and all the farmers listening out there, they know how to do, and they know how to grow corn, they know how to raise beans, they will yield themselves out. Now, as in every operation, though, you still have to be conscious about your your expenses, okay, you can't go crazy. You can't go crazy, but just payclose attention, you know, to your forecasting, your your yield counts as combine start to roll. You know whether you put that grain in a bin, whether you take it to an elevator? Watch your basis. Watch all that stuff, because it's it's very, very important, as if this year is going to be profitable for you. But remember, 250 bushel corn times $4 1000 bucks an acre, you know, 280 bushel corn times $4
Ron Stock 20:46
Like 1120
Mark Stock 20:47
So you just have to yield your way out of it. And if you see a combine that you want to buy or a corn head, you know, they backed up in price, guys and gals, bid and buy, bid and buy, and rest assured, too, that when we're working for a lot of these implement dealerships right now, their goal is still to have you as a customer, right? So when you're buying that combine and you're establishing that price through the competition of an unreserved auction, that dealership is going to still support you with that purchase, right? They're going to, they're going to want you to feel confident in what it is you're bidding on and what you're buying on. And that's the one thing that we have always done at BigIron, is provided a contact name. A dealership still wants you to have a good product. And they're going to, they provide contact people so you can call them, and if you have questions, they'll answer your questions, and don't be scared to bid and buy this late model equipment that's being sold right now. And you know some of them even, might even have some terms in financing if you call them in advance, and if you've already got an account with them, and they already can help you with that.
Ron Stock 21:57
The oldest game in the book. We've seen it for 40 years. Traders, they buy this time of year, and then they sell in December and January. So if you're looking to buy a piece of machinery, and you see your local traders buying they're planning on making money on that machine.
Mark Stock 22:16
Why do they do that Ron Stock?
Ron Stock 22:17
They buy it now, because lot of the farmers are being conservative, waiting for harvest, and they don't want to spend their money that they don't have yet,
Mark Stock 22:27
And they have it after harvest, and they don't want to pay who?
Ron Stock 22:30
They don't want to pay Uncle Sam, they don't want to pay the IRS.
Mark Stock 22:34
And the election will be over. So some instability that's in this country right now, because nobody knows who's going to win, that'll all be calmed down, regardless of who gets in that instability will be calmed down, and things will start to normalize again. Right now, there's just so much uncertainty, so people are cautious and they don't want to buy on an auction. Warren Buffett says, a long time ago, if you read his book, he says, when people are going south, you go north. When people are getting out of the market, you get in. When people are getting in the market, you get out. So now it's probably going to be real good time to be getting into buying some machinery if you need to make some upgrades.
Ron Stock 23:15
Now, I wanted to talk a little bit about why there's no season at BigIron. There's no - there's no better season to buy or sell at BigIron. A few years ago, my cousin was interested in buying a 24 row planner. So he watched some 24 row planters that a dealer was selling sell in January, and they're bringing either side of 70,000 these would have been like 2004 three machines at the time when them planters used to only bring 70.
Mark Stock 23:16
That was, that was a 10 year 10 years ago,
Ron Stock 23:41
Yep. Anyway, he watched them bring 75,000 at a dealer sale, and then he thought, I'm gonna buy one in July, when all the farmers have their operating money used up and they don't have any more room. I'm gonna be one of the only guys smart enough to hold back some operating money to buy a planter. And he bought, he bid on a planter in July, on BigIron, and they're bringing 80,000 it's like, why is that? Because all you need is a couple people thinking, like my cousin that they're going to steal it in July, and you need two or three of those kind of bidders. And remember, I told you, we're driving the machines through 12 Husker football stadiums full of men and women that buy machinery. All you need is a few strength retail.
24:26
It's a strength in numbers game. And that's, that's the important part. So I do think that's important. If you have something you want to sell, you want to find out the numbers that the person you want to sell your equipment can bring to your auction and don't get don't get blown over by, oh, my God, I'll put on the internet. Everybody comes. That's not the way it is. You need registered bidders, people that have been qualified and people that understand what the process is.
Ron Stock 24:53
Need ads in the paper.
Mark Stock 24:54
Yeah,
Ron Stock 24:54
Paper is still strong.
Mark Stock 24:56
All that stuff is very, very important. So I. Yeah, but as we get closer to the start of harvest season, which is coming right around the corner, you know, safety is always a main thing, too. And we want to encourage everybody I know, we put in long hours, and you start before the sun comes up and you're going with your your LED lights late in the morning, late into the early morning hours. Please be safe out there, because it's a precious thing that we take for granted when we're in the hustle and bustle of harvest so and when you're driving down the road, I know I see some people like to move from field to field in the middle of the night, in the middle of darkness. Well, that's okay, as long as you have somebody going ahead of you with the flashers on, because there still might be somebody else driving in the middle of the night, in the middle of darkness, and don't pop overhead with a 12 row corn head on, because you didn't think anybody's going to be driving there. That's that's not a good idea. So.
Ron Stock 25:54
The number one dangerous thing on a farm is the PTO shaft.
Mark Stock 25:58
Yeah.
Ron Stock 25:58
You know, I remember dad showing us when we were young, young boys, you know, held a shirt up on a PTO shaft, and just let it get caught in the PTO shaft, and it eats it up faster than you can see it like it's gone. The shirts gone, it's wrapped around that shaft. Of course, I've known people, and you've we've had sales for people that got killed by PTO shafts. So, you know, combines have a lot of have PTO shafts. We forget about because they're not on an auger. We don't think that's a PTO shaft, but that's a PTO shaft. You go down there messing with something while the head's running. I mean, that's the number one way you get killed. Is that PTO shaft on a new combine. It ain't stopping.
Mark Stock 26:30
Well,I tell you what, we're geared up for fall harvest, and we're geared up to get a lot of land sold and get a lot of machinery sold, and we're trying here to help a lot of bidders and buyers. So we want to thank everybody for listening to this week's episode, and we have some exciting new topics that are coming up here and episodes down the road. So please stay tuned to Gear Up by BigIron.
