It looks as if the escalating prices for farmland are finally taking a breather, according to Murray Wise Assoc., a land auction firm headquartered in Champaign, Ill.
North American ag equipment retail sales growth generally decelerated in August, with row-crop tractor sales up 11.8% year-over-year (+15.3% last month), mid-range tractor sales up 11.5% (+15.2% last month), and combine sales down 16% (+10% last month).
Slow economic growth throughout the European Union is having an impact on farm equipment sales. Several of the EU’s largest markets for ag machinery are reporting a dropoff in sales through the first half of 2013.
USDA raised its estimates of corn and wheat ending stocks, but cut its soybean forecast with its September 12 World Agricultural Supply Demand Estimates report.
In the face of declining grain prices, uncertainty about depreciation rules, skepticism about a new farm bill, and a lot of talk about farm equipment sales peaking, North American farm equipment dealers continue to see good potential for solid sales in 2014.
North American farm equipment dealers' level of optimism followed the deceleration of tractor and combine sales in July, but their outlook for the full year remained intact from previous months.
If 2013 farm production costs rise at the rates seen last year, U.S. farmers will need to take on more debt, which could curb spending on farm equipment in 2014. The Federal Reserve Bank of Kansas City reported in its July Agricultural Finance Databook newsletter that rising production costs prompted some agricultural producers to take on more debt.
Not only did CNH and AGCO see significant gains in revenues and net income during the second quarter ended June 30, 2013, but both farm equipment makers also saw healthy increases in margins that bolstered the companies’ forecasts for the remainder of the year and into 2014.
Deere & Co.’s third-quarter 2013 results easily surpassed analysts’ expectations as the world’s largest ag equipment maker posted a 26% increase in income on a 4% gain in net sales and revenues. At the same time, Deere said it expects a weaker fourth quarter in this fiscal year.
If 2013 farm production costs rise at the rates seen last year, U.S. farmers will need to take on more debt, which could curb spending on farm equipment in 2014.
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In this episode of On the Record, brought to you by Associated Equipment Distributors, we take an initial look at the Dealer Business Outlook & Trends Report and what dealers are forecasting for 2025.