Last week I had the chance to speak to a bunch of investment managers at a meeting organized by an investment bank. Most times their questions are fairly predictable, but sometimes they aren’t. Some of these managers are very “detail oriented,” which they should be, and they ask for hard numbers.
Reporting on the results of its second quarter Ag Credit Survey, economists from the Federal Reserve Bank of Kansas City suggest that, while still soft, the farm economy in the Fed’s Tenth District is showing signs of stabilization. Nonetheless, regional banks are closely scrutinizing farm loans.
Last week, both publicly traded Canadian farm equipment dealership groups issued their second quarter 2017 earnings reports. Both Cervus Equipment and Rocky Mountain dealerships posted solid revenue gains for the 3 month period ended June 30, 2017.
According to Ag Equipment Intelligence’s monthly Dealer Sentiments survey, since the start of 2017, farm equipment dealers’ year-over-year level of optimism has varied by as much as 42% from one month to the next compared to the prior year.
The 446 farmers who responded to the 4th Annual Strip-Till Operational Benchmark Study strip-tilled 469,425 acres in 2016, up 12% over the previous year’s total of 433,004 acres.
The Federal Reserve Banks of Kansas City and Dallas are reporting that demand for farm loans held steady or declined slightly in the second quarter, but renewals and extensions increased somewhat. At the same time, the banks report the interest rate on some loans, including ag machinery, has risen modestly.
A policy of enabling John Deere dealers to fill out their product lines with equipment from subsidiaries and alliance partners is continuing to be pursued by Deere with the acquisition of an Italian manufacturer of self-propelled sprayers and a newly formed alliance with the German manufacturer of agricultural material handling equipment.
Have you ever wondered what the “new normal” means? I think it’s another way of saying that things are heading south, back to some level that was considered “normal” at some point in time.
North American farm equipment dealers are still cautious when it comes to projecting sales growth for all of 2017. At the same time, some dealers are seeing signs that sales trends are improving.
Deere & Co., best known for its dominance in farm equipment industry, made a big and unexpected move on June 1 when it announced it would be expanding the reach of its Construction & Forestry division by acquiring the German construction equipment maker Wirtgen Group. Most industry analysts covering the heavy equipment market agree that the acquisition represented a major strategic acquisition that will strengthen the company’s equipment operations on several fronts.
In this episode of On the Record, brought to you by Associated Equipment Distributors, we look at President Trump's tariff reduction on ag equipment, the latest dealer sales forecasts, and how high input costs are keeping farmer sentiment down.
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