Most of the numbers are in on farm machinery sales in 2018 and, all in all, it wasn’t too bad of a year for many/most equipment dealers and manufacturers.

Last week, both AGCO and CNH Industrial reported their year-end results. Deere’s fiscal year 2018 ended on Oct. 28 and they will be reporting first quarter FY2019 earnings this Friday (Feb. 15). So far, each of the majors have reported solid results for 2018 and are expecting slightly higher sales for ag equipment in 2019.

For AGCO, net sales for 2018 increased by 12.5% to $9.4 billion. Sales for the fourth quarter rose at a much slower pace to $2.6 billion, an increase of 2.6% vs. the same period year ago. North American sales for all of 2018 were $2.2 billion vs. $1.9 billion in 2017, a gain of about 16%. The company’s outlook for 2019 calls for “modestly higher,” with North America up 0-5%, with softening in low horsepower equipment from historically high levels offset by continued gradual recovery in high horsepower equipment.

CNH Industrial reported net sales of Industrial Activities (ag and construction equipment, commercial vehicles and engines) of $27.8 billion for the year, up 8% vs. 2017. Net sales for CNH Industrial’s ag equipment segment increased 9% and total revenues grew by 9.4% for the full year 2018 vs. 2017. Overall, CNH’s outlook calls for flat demand for its low horsepower tractors and combines, but a 0-5% growth in tractors over 140 horsepower.

John Deere’s ag and turf equipment sales worldwide increased by 15% for its fiscal year ended Oct. 28. Its 2018 net income of nearly $2.4 billion was the fifth highest total in the company’s history. In his year-end report, Sam Allen, Deere’s chairman and CEO, said Deere’s largest business, Agriculture and turf equipment, reported its operating profit climbed to $2.8 billion, a 12% increase over 2017. Allen said the company’s strong performance was the result of better market conditions, fueled by replacement demand for new equipment, as well as customer enthusiasm for innovative new products featuring the latest precision technology.

Deere’s worldwide sales of agriculture and turf equipment are forecast to be up about 3% for fiscal year 2019.

In their outlook for the year ahead, a common thread running throughout the comments for each of the major’s is that replacement demand along with farmers’ desire to adopt new technology to their operations will support equipment sales in 2019.

As for the official tractor and combine sales figures for 2018, AEM reported for the full year unit sales were up across the board, for the most part.

2018 Tractor & Combine Unit Sales (Assn. of Equipment Manufacturers)

  U.S. Canada
<40 HP Tractors  +9.2%  +4.8%
40-100 HP Tractors     +1.5% –3.2%
>100 HP Tractors     +5.5%   +3.0%
Total 2WD Tractors    +6.8%    +2.4%
4WD Tractors  +12.9% –13.1%
Total Tractors    +6.9% +1.7%
Combines +18.2% –4.0%

According to about 140 dealers who responded to the most recent Ag Equipment Intelligence Dealer Sentiments & Business Conditions Update survey, they are expecting about a 2% increase in equipment sales for 2019.

Dealer commentary reflected healthy year-end sales for 2018 and a fairly positive start to the new year. Selected comments include: “We had a better month than expected as well as more commitments for January than expected” … “We saw fairly strong purchases despite declining commodity fundamentals” … “Tractor interest remained moderately strong, particularly in the second half of December” … “Combine sales were brisk at year end. We are quoting planters at a better rate than we had anticipated” … “We saw a rush to buy at the end of the year.”

They also noted that, as a result of the solid year-end sales of new machines, used equipment inventories seemed to slow down. “We had a great start to 2019 with combine pre-sales. Used combine sales were down as a result” … “Even with a lengthening trade cycle, our new sales continue to climb and our used sales continue to fall” … “There are still too many used combines and row-crop tractors in the market.”

Besides low commodity prices, it would appear that dealers’ biggest concern for 2019 is the price hikes manufacturers initiated on new machinery. “The majority of manufacturers appear to be raising prices approximately 5-10% in 2019” … “We saw resistance from most customers on new product price increases” … “We are anticipating another price increase from our manufacturer.”

Another comment we’ve noticed creeping in the past few months is one we have not heard for a few years. On dealer added, “The manufacturer’s ability to deliver product will remain a key concern for us in 2019.” We’ll need to keep an eye on this to see if it’s a growing concern throughout the year.

So, there you have it. The manufacturers are looking at flat to up 5% North American sales of ag equipment in 2019. The dealers presently are projecting about 2% increase for the year. 

In our view it is steady as she goes throughout 2019. We don’t look for any major adjustments for the year unless something positive comes from the U.S.-China trade talks, which we would not discount.