Farm tractor and combine sales continued to dip in October as buyers remained cautious despite interest rate cuts.
Demand for farm equipment continued its decline from the first half of 2024, with sales of tractors and combines down double-digits quarterly and year-to-date following slow October sales, according to the Association of Equipment Manufacturers (AEM).
October sales for:
- Two-wheel drive farm tractors landed at 20,631 units, down 14.7% year over year;
- Four-wheel drive farm tractors finished at 723 units, down 0.4% YoY;
- Total farm tractors were 21,354 units, down 14.2% YoY;
- Self-prop combines ended at 516 units, down 34.6% YoY.
Meanwhile, year-to-date sales for:
- Total two-wheel drive farm tractors reached 185,259 units, down 13.6% YoY;
- Four-wheel drive farm tractors finished at 3,835 units, up 1.3% YoY;
- Total farm tractors were 189,094 units, down 13.3% YoY;
- Self-prop combines ended at 4,977 units, down 23.1% YoY.
Tightening farm economy
The decline in tractor and combine sales in 2024 comes as a tightened farm economy has farmers and other equipment buyers waiting for relief Jay Darden, regional sales manager for the East Coast at Farm Credit Express, told Equipment Finance News.
“The realization of just how tight the commodity prices and the net income are really got people sitting back on the heels a little bit,” he said. “They’re making purchases that they have to have, not what they want to have.”
While commodity prices and net farm income remain concerns, interest rate reductions continue to provide a source of optimism, especially among veteran farmers, Michael Langemeier, associate director at the Center for Commercial Agriculture at Purdue University, told EFN.
“Interest rates have been reduced as a concern as about 15% of people think that interest rates are their biggest concern, but that was as high that was over 20% for a while, so with the recent [Federal Reserve] cuts … that’s helped a little bit,” he said. “I still run into farmers that remember the early ’80s too, so they tell some of the younger farmers these interest rates are nothing compared to what they used to be.”
Despite interest rates declining, OEMs such as CNH Industrial continue to work with dealers to reduce inventory and combat depressed commodity prices, Chief Executive Gerrit Marx said during the company’s Nov. 8 earnings call.
“As in prior cycle swings, but in a more proactive way, we continue to work with our dealers as they reduce their inventory levels, which are above our set targets entering 2025,” he said. “We know what needs to be done here, and our efforts to underproduce retail demand will continue into 2025.”
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