Stalled by falling crop prices, the farm machinery market’s engine is currently sputtering along at low rpms. Dealers are slashing price tags to move combines and 100-plus-hp tractors off crowded lots to make room for newer, more expensive machines, according to the latest monthly market report from Sandhills Global.

This is good news for producers looking to score a deal at the auction.

“Auction values react much quicker to market changes than asking values,” says Ryan Dolezal, sales manager at TractorHouse. “Sandhills is currently seeing rapidly growing spreads between auction and asking values, and that’s bringing us closer to the value spreads we experienced during 2015 and 2016.”

High-horsepower tractor inventory jumped 2.5% month-over-month. It’s now up almost 60% year-over-year. To make room for new models, some machines are being brought to auction, with more than half of auctioned tractors newer than 2019. Other information from the report follows:

The equipment sales slowdown comes as farmers face rising production costs and a rainy start to the year. The USDA has forecasted net farm income of $116 billion this year — down from $156 billion in 2023 and an all-time high of $186 billion in 2022.

Industry consolidation

With sales slowing, the industry is consolidating, based on data from Ag Equipment Intelligence’s 2024 Big Dealer Report, which tracks the ownership changes and trends of North America's largest farm equipment dealers.

“The number of big dealers in North America dropped for the second year in a row,” says Ben Thorpe, Ag Equipment Intelligence’s associate editor.

North America had a record 214 large dealers with more than five stores in 2022. This year’s report lists 206 big dealers. Meanwhile, the total number of stores operated by these dealers increased from 2,358 in 2022 to 2,656 in 2024.

Amid the economic downturn, farmer sentiment has plunged to its lowest level since 2022, according to Purdue University and CME Group’s Ag Economy Barometer. The report is advertised as a nationwide measure of the agricultural economy’s health.

Concerns about the current financial situation and expectations for weak financial performance in the year ahead drove the falloff in farmer sentiment, according to the report.

Original machinery manufacturers also are feeling the pinch. AGCO reported a 12% year-over-year sales decline in its first-quarter earnings report. CNH Industrial reported a 14% decline in first-quarter sales.

John Deere reported a similar year-over-year decline in its latest second-quarter report.

“Large ag equipment industry sales in the U.S. and Canada are now expected to decline 15%, reflecting further demand reduction in the back half of the year, primarily in large tractors,” said Josh Rohleder, John Deere’s manager of investor communications, in a recent earnings call. “We see continued softening in grower sentiment as the combined impacts of rising global stocks, lower commodity prices, high interest rates and weather volatility weigh on customer purchase decisions.”

Rohleder also noted that “increases in used inventory levels, particularly late-model-year machines,” is having an impact on its market outlook.

Given the outlook, manufacturers are cutting back to balance their budgets. CNH Industrial is laying off more than 200 workers from its manufacturing plant in Racine, Wis. Deere is letting almost three dozen production employees go from its Illinois agriculture equipment plant at the end of the month, on top of 400 jobs that were cut in Iowa.