By Ryan Hanrahan
Bloomberg’s Michael Hirtzer and Matthew Griffin reported that “Deere & Co.’s weak forecast for the year ahead reinforces the difficulty in predicting a recovery in the US farm economy as uncertainty continues to swirl over the impact of tariffs and trade deals.”
“Shares of the world’s biggest farm machinery maker fell as much as 5.7% in New York as the company’s first profit outlook for 2026 fell short of expectations. The forecast underscores how the agriculture sector remains in the dark even after a US trade agreement resumes crop shipments to China,” Hirtzer and Griffin reported. “Farmers have been grappling with President Donald Trump’s tariff policies that squeezed demand and raised costs. While the recent deal with China is raising hopes, there’s still questions on whether the ramp-up of soybean and wheat sales will be enough to shake the US farm economy out of a years-long slump.”
“‘Deere’s widely underwhelming 2026 guidance suggests a more severe and prolonged agricultural downturn than we initially anticipated, though it offers clarity on trough earnings this cycle,’ Bloomberg Intelligence analyst Chris Ciolino wrote in a report,” according to Hirtzer and Griffin’s reporting. “Deere said net income in the 2026 fiscal year will be between $4 billion and $4.75 billion. That misses the average Bloomberg estimate for $5.31 billion, and would be a drop from the $5.027 billion reported for the year just ended.”
“‘Our organization is used to managing cyclicality, but this year we faced an additional headwind of heightened uncertainty in a rapidly changing business environment,’ Chief Executive Officer John May said on a Wednesday call with investors,” Hirtzer and Griffin reported. “May said in a statement that Deere believes 2026 ‘will mark the bottom of the large ag cycle.’”
Ag Equipment Maker CNH Recently Trimmed Outlook
Reuters Abhinav Parmar reported in early November that “farm and construction machinery maker CNH Industrial lowered its full-year profit forecast on Friday, as it intentionally scaled back production of tractors and combines to avoid a supply glut amid sluggish demand.”
“The company, which is famous for its Case IH and New Holland brands of tractors, said it produced fewer units in 2025 than a year earlier, and that, coupled with weaker sales, weighed on its margins,” Parmar reported. “Farm equipment manufacturers have been forced to scale back production as demand for new machinery remains muted, with lower crop prices and rising production costs prompting farmers to defer big-ticket purchases.”
Source : illinois.edu