Deere & Co. (NYSE:DE) just delivered the kind of outlook that could reset expectations across the entire farm-equipment complex. After unveiling a 2026 net-income forecast of $4 billion to $4.75 billionwell below the average Bloomberg estimate of $5.31 billion and short of the $5.027 billion it posted for the past yearthe stock fell as much as 5.7% in New York. Management framed the guide as a function of a rapidly shifting operating backdrop shaped by tariffs, unpredictable trade flows, and a farm economy still trying to find traction. CEO John May told investors the company is navigating heightened uncertainty and suggested 2026 could be the bottom of the large-ag cycle, even as cost pressures, including roughly $1.2 billion in tariff-related expenses before taxes, continue to encroach on margins.
Under the surface, the data paints a sector still struggling to regain momentum. Farmers have been absorbing the effects of President Donald Trump's tariff policies, which raised costs and dampened demand, and the recent US-China deal has yet to unlock a meaningful surge in crop buying. China has taken nearly 2 million tons of US soybeans since Oct. 30far below the 12 million tons the US says Beijing plans to buy this season. Bloomberg Intelligence analyst Chris Ciolino noted that the subdued guidance could be signaling a deeper downturn than anticipated, while portfolio manager Brian Sponheimer said farmers are not rushing back to place orders. Deere now expects large-agriculture sales in the US and Canada to fall 15% to 20% in 2026, with South America remaining flat. Even with stronger fourth-quarter sales, operating profit slipped as equipment costsmany tied to tariffskept rising.
Policy signals could shift the narrative, but for now they add another layer of uncertainty. Trump said he urged Chinese President Xi Jinping to accelerate agricultural purchases and claimed Beijing had more or less agreed, though US Department of Agriculture data has yet to show that acceleration. Rival CNH Industrial recently pointed to ambiguity in the terms of the trade deal, underscoring the difficulty farmers face as they plan next year's planting and equipment cycles. A long-awaited relief package for growers is expected to begin payments in early January, according to US Agriculture Secretary Brooke Rollins, though Bloomberg Intelligence's Nathan Dean wrote the program may offer only temporary support and could set up another funding round in 2026. Deere shares were recently down 5.1%, though still up about 12% for the year after hitting a record in May.
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