The shopping list still may include a tractor. But not as many buyers are crossing off that tractor from the list. John Deere & Company reported that tractor sales have declined, which should come as no surprise to many.
The USDA predicted that farm income would drop 25% in 2024 compared to the elevated levels of 2022 and 2023.
That forecast may give farmland owners and investors pause in committing resources toward a new tractor. Stubborn inflation doesn’t help either.
John Deere & Company has lowered profit expectations throughout the year.
Initial profit forecast: $7.75-8.25 billion
Modified profit forecast: $7.5-7.75 billion
Newest profit forecast: $7 billion
Smaller equipment purchases dropped by a higher percentage compared to larger equipment.
The Associated Press reported a 23% drop in revenue for small and certain mid-size tractors. The decline was 16% for other mid-size and large tractors and combines.
John Deere & Company has made production changes due to the outlook for sales for the rest of the year.
The Wall Street Journal reported, “Deere said Thursday that it now expects sales of large, high-horsepower farm machinery, small tractors, and landscaping equipment to decline by 20% to 25% this year. The company had previously forecasted about a 20% reduction in high-horsepower equipment sales and a 10% to 15% sales decline for small tractors and turf equipment.”
The plan for the company, according to the report, is to pull back on production and give retailers time to lessen supplies on hand.
“Deere plans to build tractors, harvesting combines and other machinery at volumes below the rate of retail sales for the remainder of the year to aggressively draw down inventories at its dealers,” the article said.
