Challenges in the Agricultural Machinery Sector: An Overview

By Ryan Hanrahan

Deere & Co.’s Weak Forecast and Its Implications

Recent reports from Bloomberg indicate that Deere & Co., the world’s largest farm machinery manufacturer, has unveiled a weak forecast for the upcoming year. This setback highlights the ongoing challenges in predicting a recovery within the U.S. farm economy amidst continuous uncertainty surrounding tariffs and trade deals.

According to Bloomberg’s Michael Hirtzer and Matthew Griffin, “Shares of Deere fell as much as 5.7% in New York as the company’s first profit outlook for 2026 failed to meet industry expectations.” The forecast sends a clear message that the agricultural sector is still grappling with the repercussions of President Donald Trump’s tariff policies. These policies have increased costs and reduced demand, raising concerns about whether recent trade agreements with China will significantly uplift the U.S. farm economy, which has been in a slump for several years.

Analysts have noted that “Deere’s forecast indicates a more severe downturn in the agricultural market than previously anticipated.” The company projects a net income for the 2026 fiscal year to be between $4 billion and $4.75 billion, falling short of a $5.31 billion average estimate. This comes as a significant drop from the $5.027 billion earned in the previous fiscal year.

During a call with investors, CEO John May acknowledged, “Our organization is used to managing cyclicality, but this year we faced an additional headwind of heightened uncertainty in a rapidly changing business environment.” May expressed his belief that 2026 “will mark the bottom of the large ag cycle.”

CNH Industrial Adjusts Profit Outlook Amid Weak Demand

In a related development, CNH Industrial, known for its Case IH and New Holland tractor brands, has also revised its full-year profit forecast downward. As reported by Reuters’ Abhinav Parmar, the company is intentionally reducing production of tractors and combines to avoid a supply glut in response to sluggish demand.

CNH stated that their production has decreased compared to the previous year, contributing to weaker sales and compromised margins. A combination of lower crop prices and increased production costs has pushed many farmers to postpone significant machinery investments.

CNH now expects its 2025 adjusted profit to fall between 44 to 50 cents per share, down from their earlier forecast range of 50 to 70 cents. Analysts estimate a full-year profit of 59 cents, underlining the challenging landscape in the farm machinery sector. In light of the August 2025 expansion of tariffs in the U.S., the company indicated it will attempt to mitigate financial strains through global sourcing optimization and pricing strategies.

Farmers Face Cash Flow Challenges as 2025 Concludes

A report from AgWeb, written by Rhonda Brooks, highlights a pressing concern for farmers as they wrap up the 2025 harvest season. While many have successfully gathered their corn and soybean crops, a looming issue remains: inadequate cash flow.

According to southeast Illinois farmer Sherman Newlin, “I think these low prices are starting to take a toll on guys trying to meet their cash-flow needs.” For many producers, the struggle goes beyond surviving until the next planting season; it also involves meeting various financial obligations, including land rents and input costs.

As farmers reflect on what they are thankful for this holiday season, many are deeply concerned about the financial hurdles that lie ahead. These issues further underscore the complexity and fragility of the current agricultural economy.

For additional insights, check out the original piece here, published on Farmdoc.

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