It has been demonstrated that crop receipts are an important indicator of farm machinery sales. Since 2009, the value of the production of corn, soybeans and wheat in the U.S. has correlated very closely with the purchase of high horsepower tractors.
Ultimately, though, farmers purchase equipment with what’s in their pocket, or their net income. As a result, for those who follow the ag machinery market, both of these metrics require close attention as crop receipts is a good gage for the direction of net income. But the outlook for 2018 farm net income varies depending on recent reports from USDA on Aug. 30 and University of Missouri’s Food and Agricultural Policy Research Institute (FAPRI) on Sept. 18.
However, the USDA outlook did not include potential payments from the Market Facilitation Program (MFP) that provides farmers with compensation for losses incurred because of trade disputes, announced on Aug. 27. On the other hand, FAPRI’s farm income projections incorporates the initial round of MFP payments. The full story can be accessed from the Ag Equipment Intelligence website.