Equipment manufacturers sold more tractors and combines in January-July than they sold a year earlier, but the Equipment Manufacturers Association said its members were starting to be concerned about the rest of 2018.
Unit sales of all farm tractors in the first seven months of the year increased 7.4 percent and self-propelled combine sales jumped 23.7 percent, AEM said in its monthly report.
“Surveys of our membership show a good majority feel the market has been strong this year but are beginning to have concerns about the second half of the year,” Curt Blades, AEM senior vice president for ag services, said in a news release. “Tariffs and trade continue to dominate the conversation, with the lingering uncertainty of their impact on current positive market performance.”
In a quarterly financial report filed at the end of May, Deere & Co. said ag machinery sales in the U.S. and Canada are forecast to increase about 10 percent this year, but said it was concerned about trade.
In a conference call with analysts July 31, AGCO CFO Andrew Beck responded to a question about “customer or dealer angst” related to trade tariffs.
“I would say that from a dealer standpoint, there has been concern because of where the crop prices went and all the talk and consideration regarding tariffs,” Beck said.
The USDA’s aid program helps offset the price drop, “but I would say that our customers certainly would rather see free trade than farm aid.”
And Derek Neilson, interim CEO of CNH Industrial, told analysts farmers are looking for new equipment to boost efficiency and profits.
“We don't envisage any lack of need for the products themselves. It really is just to get clarity of this trade war fiasco that we're currently finding ourselves embroiled in.”
The AEM report showed July U.S. sales of new 40 to 100 horsepower tractors fell 1.5 percent from a year ago, while sales of tractors smaller than 40 hp gained 16.4 percent and those with 100 hp or more jumped 30.8 percent.
July sales of four-wheel-drive tractors surged 77.5 percent from a year ago to 213 units and sales of self-propelled combines jumped 37.2 percent.
Annual sales of new tractors less than 40 hp climbed 80 percent from 2009 to 144,038 units last year, or two-thirds of two-wheel drive tractor sales, according to AEM data. Meanwhile, sales of 40-100 hp units gained 18 percent to 57,055 tractors. Sales of 100+ hp tractors reached a recent high of 37,232 units in 2013 and fell to 17,026 tractors last year.