January’s report from the Association of Equipment Manufacturers may bode good news for tractor buyers and no-so-good news for dealers. USDA’s recent projection of 2016 being the third straight year in declining net farm income has machinery dealers anxious and in need of boosting cash flow. That smells like an opportunity for those needing to replace tractors – and have the cash flow to do so.

BEST BUY? Winter sales of larger 2wd and 4wd tractors have been weakest. Check out the prices at farm shows and at your local dealership.

Last week’s USDA announcement that 2016 net cash farm income will be down 2.5%, “which indicates stabilization in comparison to the more than 30% drop last year,” reasons Charlie O’Brien, AEM senior vice president. “While this deterioration in farm economics will undoubtedly affect our industry, there’s still some hope that production ag might get a boost from an extended Section 179.

“We’re seeing some bright spots in the data from January sales,” adds the trade organization leader. “Our members tell us they’re gearing up efficiency and are better prepared to meet the challenges of this new normal than they were 12 months ago.”

Brightest buying opportunities
U.S. retail sales of self-propelled combines were up 21.4% in January compared to year-ago sales. Sales of tractors under 40 hp were also up 13% over the same period – likely reflecting demand for non-farm uses

Conversely, January sales of 40- to 100-hp, 2-wheel-drive tractors fell for the third consecutive month, dropping 5.7% compared to year-ago sales. Sales were weakest for 2wd tractors larger than 100 hp, plummeting 38.5%, compared to January 2015.

What about those 4-wheel-drive tractors? Those sales, too, were down – 9.3% compared to January 2015.

AEM’s Market Intelligence department tracks sales by month. The data clearly shows that November and February are the weakest sales months for U.S. tractors and combines.

Data from AEM’s Agriculture Equipment Retail Sales Flash Report is derived from AEM member companies. Visit www.aem.org/agreports to view the reports and track monthly changes.