North American farm equipment sales continued to rise in August, but the pace slowed somewhat compared to previous months, according to the latest figures from the Assn. of Equipment Manufacturers. Of more concern than the unit sales may be the building inventory of new machinery that has caught the attention of industry observers.
According to the AEM number released last Tuesday, August sales of row-crop tractors were up 11.8% year-over-year vs. up 15.3% in July. Utility tractor sales also rose 11.5% during the month, which compares with up15.2% during the previous month. 4WD tractor sales increased 0.5% vs. the same period last year, following a 10.7% decrease last month. Combine sales down 16% vs. +10% in July.
Commenting on the growing backlog of equipment, Mircea (Mig) Dobre, analyst with RW Baird, said, “Inventory levels continue to rise, with growing risk given sales growth deceleration, particularly for combines.”
Noting the same trend, Steven Fisher, analyst for UBS Investment Research, said in a note to investors, “Reported inventories in four of five equipment classes are above year-ago levels: row-crop tractors +37%, combines +15%, four-wheel drive tractors +12%, utility tractors +5% and small tractors -4%. On a running 3 month (R3M) basis, inventories of high horsepower equipment are 36% above year-ago levels (+41% last month). This compares to a 12% year-over-year increase in R3M sales of high horsepower equipment.”
Fisher added, “While sales of high horsepower equipment remain positive, except combines, growth rates so far in the second half of 2013 are lagging those of the first half.”
|North American New Farm Equipment Inventory Levels|
|(as of August 1, 2013)|
|Compact Tractors||Utility Tractors||Row-Crop Tractors||Combines|
|Inventories — Current Month||59,174||29,628||14,138||2,177||3,208|
|Sequential % Change||–4.7%||1.2%||6.1%||0.9%||–1.3%|
|Year-Over-Year % Change||–3.8%||5.3%||36.6%||11.6%||14.9%|