Deere & Co., the world's largest farm-equipment manufacturer, sees another difficult year ahead for the U.S. farm economy.
Why it matters: America's farmers have been in a two-year slump, squeezed by rising costs, falling crop prices, tariffs and a global trade war.
Zoom in: Deere on Wednesday provided its first forecast for 2026, saying it expects its business selling to large-scale farms in the U.S. and Canada to fall 15% to 20%.
- Row-crop farmers — like those growing corn, soybeans, and wheat — continue to face headwinds, pressuring their short-term liquidity and causing them to continue to rely on older, used equipment, the company told investors.
- Deere is continuing to keep production tight for large equipment in response to low demand, noting that its inventory of big tractors ended the fiscal year at the lowest unit level in over 17 years.
Zoom out: "Our organization is used to managing cyclicality. But this year, we faced an additional headwind of heightened uncertainty in a rapidly changing business environment," CEO John May told investors on an earnings call Wednesday..
- While noting Deere sees "big ag" in North America declining again in 2026, CFO Josh Jepsen predicted next year "will mark the bottom of the cycle."
Between the lines: There are some positive factors serving as seeds for a possible recovery, Jepsen says. One of them is a recent trade agreement between the U.S. and China, which the industry is hoping will fix the damage caused by the prolonged trade war triggered by President Trump's tariffs.
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