As many of you know and have read in my previous articles, I was among the first to predict a major downturn in agriculture back in 2023. At that time, I was generally cautious because of the oversupply of grain and the never-ending growth of Brazil as China’s new primary supplier. I received a lot of criticism for being too negative. While many of you in my network agreed with my prediction, there was skepticism that my predictions were too pessimistic. In 2024 and 2025 we saw geopolitics tear down trade institutions, setup tariffs and generally stall out the grain trade. Grain was too abundant and supply / demand economics dominated. Machinery sales plummeted soon after.

The only exception was that cattle markets exploded with a shortage of beef and a shrinking cow herd. I hate to say it, but I was probably not as pessimistic as I should have been. The downturn has lasted longer than most were expecting but that tends to be the case when there is a lot of uncertainty and excess grain supplies. I did note, however, that 2 unlikely factors could create a change in markets; (1) a major, continent-wide crop failure or (2) a major geopolitical conflict. Well, guess what, #2 is happening now and low and behold grain prices are suddenly rising. The change has been so immediate that most people are still living in the downturn news cycle.

There are really multiple issues that are coincidentally contributing to the rise in commodity prices. First, let’s talk about how ag cycles work. We are now in the 3rd year at the bottom of the ag cycle. Based on historical patterns, the cycle tends to start to rise after 2-3 years, driven by the potential for grain supplies to tighten after farmers finally decide to stop growing grain at a loss. We just happen to be at a point where I think the ag-cycle was about to start ticking back up, slowly and cautiously, but up nevertheless. Recent events have simply accelerated this. 

The second issue driving things though is a simultaneous geopolitical event (Venezuela and Iran conflicts) that has caused commodities to rise. Oil generally sets the pace and we are seeing that now with the markets looking at grains as a place to invest. Oil hit over $100/barrel tonight. Grain values are generally still well below the last peak of the cycle and if there is a upward trend to commodity price booms, markets tend to jump in with a lot of cash to try to make some profits on rising prices. We often see grain markets caught in what many call the commodity super cycle, tied to oil, minerals, lumber, etc. It started with gold, now oil and grain is along for the ride. 

Thirdly, the other major change is that China and India are entering a new era of trade openness and re-engaging Canada, Europe and Australia vs the developing countries that have supplied cheaper commodities in the last few years. Import tariffs are going away. China has also started to realize that the dream of grain self sufficiency is too risky and expensive. Importing for the near terms is likely a better strategy and having diverse supplies is more important than reliance on Brazil and Argentina. China will probably switch back to these suppliers in the next downturn but when grain prices rise, they need more supply and more options to hedge risk. The US is putting a lot of pressure on Latin America to disengage with China and tow the line with America. I think that has spooked China as they cannot afford supply disruptions. They will buy grain from the US and many western nations just to avoid trade wars. While this may be a short-term strategy, it is definitely impacting markets in 2026.

There are also a myriad of other factors such as unsecure shipping lanes in the middle east / Indian ocean, Panama Canal access, lack of US protection of trade lanes and logistical challenges with the ongoing Ukraine war with Russia. Grain moves fairly well when things are open and safe, but as we found out when the tanker blocked the Suez canal, things back up pretty fast. It is chain reaction that tends to interrupt supplies and the commodities go up.

However, within all this are a very complex set of factors and all of them are fragile. Of the 3 top issues I listed above, any one of them can tilt in the other direction quickly and markets will be volatile as a result. The fundamental trend that needs to be observed though is that agriculture has a very reliable cyclical pattern to grain prices. It is generally over a 7-year period and the only adjustments are how long the high and low last and how long each transition (rise vs fall) occurs. So, sometimes we have a 5-year cycle and sometimes a 10-year cycle, but there is always a cycle.

I used the Jenga game image above to try to illustrate my point. For a farmer, the decisions are very dicey. The world moves very fast these days and markets rise and fall on much shorter intervals than before. It makes it very hard to plan when all the variables can shift so dynamically. Just like Jenga, pull on the wrong block the wrong way and the whole tower comes crashing down. But I still see solid decisions that can be made once we sort out the noise.

What am I predicting and what good decisions can farmers make in the machinery market?

As many of you know, I recently took the helm at Mazergroup. Some of you asked, with all of my criticism of the industry why would I take that on? The truth is, if I am going to be a Monday morning armchair quarterback I might as well get back in the game. I was honored to be invited to join one of the best teams in the league. In this position, I can actually make an impact and drive some of the changs and improvements I believe our industry needs. I believe in putting the customer first and in the case of Mazergroup, we are in a good position to support the dynamic issues facing farmers today.

Here are a number of distinct factors that farmers should consider:

  1. Machinery fleet hours have risen significantly between 2023 and 2026. What I mean by that is with the sharp declines in new machinery purchases over the last 3 years, the existing machinery was being operated and not traded. That means hours were added each season. It has accumulated. It means many farms are due for an upgrade. Some Tier 2 or Tier 3 farms have run the same equipment for 5 or 6 years.
  2. Lower hour used equipment is not as abundant as the market thinks. If a farmer is planning to upgrade there is a lot to consider and one major factor is that finding some 1 or 2 year old machines with lower hours is harder to find in 2026. That is because fewer machines were purchased in 2024-2025 and therefore less trades. There are a lot more 5 -10 year old machines than 1-3 year old. Some mainline brands are sitting on a lot more of this than others as well . . . not naming any names. That excess has devalued some of the inventory, both on farms and in dealerships.
  3. Large fleet farms have grown significantly in the last 3 years, but the trade economics have started to hit reality when it comes to 1 year flipping. Large farms have realized that a dealership partner is critical to enabling the passage of their trade-ins onto Tier 2 farms. The balance between a Tier 1 farm and several Tier 2 farms is crucial to manage if the trade-in values are to be supported. Alongside this is the importance of OEM sales programs and discounts on Tier 1 fleet purchase to make the whole economic equation viable.
  4. When the market starts to wake up and realize that the rise in grain prices is real, the market will get hot very quickly and finding machinery that matches Tier 2 and Tier 3 farmer specifications will get harder. We are not that many years from the Covid supply disruptions and the toilet paper psychology will kick in fast again. Supplies will be tighter than expected and if you haven’t made a move sooner, you will have to wait a year and pay a higher price with the demand for low hour trade-ins rising.
  5. There are a lot of 5 year+ machines with medium levels of hours suited to Tier 3 and Tier 4 farmers. However, the supply is abundant while the number of these farmers is shrinking. Disposal of older, higher hour machines is getting more difficult, and trade-in values need to be more realistic than in the past. In previous cycles, all levels of demand moved up and down in proportion. That is no longer the case.
  6. New machinery sales for 2026 are largely already determined as there is limited new wholegoods inventory in the market right now. That means the number of machines to be traded in for 2027 are largely already determined and are matching the bottom of the market figures. 2027 will likely see a lot of commitments for new purchases but those trades won’t hit the dealerships until later in 2027 or 2028. That means the availability of those trade-ins is 2 growing season aways. The market cycle could really shift in that timespan.
  7. You need better machinery to expand acres or grow bigger crops in 2026 and 2027 if you want to take full advantage of the grain price improvement. Delaying 2 years means you have acquired better equipment just in time to see prices start to come back down . . .

Here is what I think farmers should start thinking about:

  • Plan ahead and if you believe you need to upgrade equipment but are waiting for the grain market to improve, now might be the time to make a move.
  • It is clear that to get low-hour used equipment you have to work with the dealers. There isn’t likely to be as much available on auction or through lease returns as there use to be, just because of how low the new equipment numbers have been.
  • If you are sitting on higher hour machinery and planned on good trade values, it is best to find a buyer that wants your equipment rather than expecting historical trading values from auctions to hold up. Working with your dealer to match you up with the right resale buyer is a better strategy than playing the anonymous game.
  • If you have a medium hour machine and want it to have a better trade value, it is important to have a strong maintenance record. Buyers have the option to be pickier on higher hour machines and tend to walk away from equipment where there isn’t any record of maintenance or previous owner care and management. No one wants to buy a machine that needs a bunch of work or there isn’t any record of who owned it, unless they can get it cheap. As a seller, you most likely don’t want to dump your machinery for a low price.
  • Know what specification you need and then focus on finding that. It doesn’t have to be in your region, dealers are pretty open to helping you source equipment and getting it in your hands.

In summary, and as you can tell by my tone, I am now optimistic. Just as much as I was a pessimist 3 years ago, I am predicting an upswing. It won’t be as crazy a 2020-2021 but it is still going to be positive. It took time to put hours on the fleet, but now that this has occurred and we are 3 seasons in, it means eventually there needs to be newer machinery added to the fleet for renewal reasons. It is going to be a volatile next 3 years as geopolitics dominates the markets and reactions will swing prices up and down. The good news is that they will swing up and that will improve farmer profitability and the capacity to invest in machinery.

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