Numbers can give you give you a pretty good look at the big picture, but it’s the boots on the ground views and commentary that help to explain the numbers.
For the largest categories of tractors and for combines the general economy certainly has an indirect effect upon sales activity at the dealerships. Rising commodity prices, a boon for farmers, ranchers and dealers, is reflected in an increased grocery bill for the consumer and is often accompanied by a resistance to paying the higher price for premium items.
While the global downturn in the agricultural machinery industry seems to have stabilized, global recovery is not in sight for the next six months, according to results of the latest Agrievolution Business Barometer survey.
With 98% of U.S. corn acres planted, USDA is reporting that 90% have also emerged as of June 5, according to USDA. The 98% planted compares with 94% a week earlier and 99% a year ago. The 5-year average for this date is 97%.
With few exceptions, global tractor and combine sales show little sign of picking up in the near term. While USDA’s May 10 report offered some optimistic news on crop surpluses, especially for soybeans, it remains to be seen whether or not the uptick in crop prices will hold.
We regularly hear from dealers that $4 corn and $10 soybeans represent the psychological threshold for farmers. When corn goes over $4 and beans over $10, most farmer’s outlook improves markedly. Over the last month or so we’ve seen a nice increase in crop prices. I was on the road last week visiting dealers, and one of them mentioned he’s started to notice an improvement in farmer sentiment.
When it comes to combines, there’s some fascinating data we have to share with you. Breaking things down by combine class size, here’s the results from March 1 to May 27, 2016 in terms of most search clicks on dealer combine listings at MachineryPete.com.
Exports of U.S.-made agricultural equipment for first quarter 2016 dropped 8% overall compared to first quarter 2015, for a total $1.7 billion shipped to global markets.
Demand for loans for ag equipment and other capital expenditures continued to decline in the first quarter of the year, the volume of large non-real estate farm loans continued to have a significant effect on changes in farm lending, according to the Federal Reserve Bank of Kansas City.
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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