As we move into February, this is as good a time as any to look at where we've been and where we are to get a picture of where we're heading.
The final numbers for the past year are coming in and it's evident that most farm equipment dealers and suppliers had a good year in 2011, and most are feeling pretty good about 2012. And, at the moment, there's little, if anything, to indicate that the market for ag machinery will move too far up or too far down in the year ahead. Considering the industry is coming off three strong years, the outlook for steady, moderate, growth is a strong positive.
Reviewing the past year, sales of farm equipment continued on solid footing. According to the January report from the Assn. of Equipment Manufacturers, North American retail sales of all categories of farm tractors were up during calendar year 2011, but combine sales softened as the year progressed.
- 2WD tractors less than 40 horsepower +2% (96,164 units)
- 2WD tractors 40-100 horsepower +4% (57,048 units)
- 2WD tractors over 100 horsepower +2% (31,885 units)
- Total 2WD tractors +2% (185,097 units)
- Total 4WD tractors +3% (7,337 units)
- Total tractors over 40 horsepower +3% (96,310 units)
- Total combines -4% (12,842 units)
Overall, dealer sentiments about their sales prospects for all of 2012 continue to be optimistic. Their major concerns continue to be the higher than usual used equipment inventories and tight availability of new equipment. This, they say, could be their biggest roadblock to even higher sales this year.
Here are some of the most significant trends in equipment sales from the January Dealer Trends & Business Outlook report issued last week. Nearly 300 dealers responded to the survey conducted by Ag Equipment Intelligence and Cleveland Research Co. It's estimated that these dealers represent combined annual revenues of about $9.5 billion.
Looking across 2012, dealers slightly lowered their forecast and now expect 3% sales growth for the full year, down from 4% in November.
New Equipment Trends
- New equipment inventory remains tight as a net 29% of dealers report their new inventory is "too low." (11% too high; 49% about right; 40% too low).
- Overall, a net 59% of dealers report longer factory lead-times compared to last month (63% longer; 32% same; 4% shorter), which is down slightly from the net 60% in November.
- Compared to the previous month, dealers report that overall lead times for new combines and tractors are stable to slightly shorter. On average, combine lead times are 7.3 months; 4WD tractors are 5.8 months; row-crop tractor lead times are 5.9 months; and smaller tractors (less than 100 horsepower) lead times are 4.9 months.
Used Equipment Trends
- Used equipment inventories appear to have decreased somewhat compared to the previous month. A net 1% of dealers now categorize their used inventory levels as "too high" (24% too high; 53% about right; 23% too low). This compares to a net 3% from the previous survey.
- A net 28% of dealers say their used combine inventory remains "too high" (39% too high; 50% about right; 11% too low).
- By category, tractors over 100 horsepower were up 4.1% year-over-year on average in December, up from 3.9% in November. Prices for used tractors under 100 horsepower are up 2.4% in December, which is an increase from 2.1% in November. Used combine values are up 0.3% in December, consistent with last month.
- A net 3% of dealers are reporting higher values for under 100 horsepower tractors, which is down from 7% in November. For over 100 horsepower equipment, a net 21% of dealers report higher values vs. last month, down from a net 24% in November. Finally, a net 11% of dealers report used combine values are lower than the previous month.