The tractor market in the US may be outperforming a cautious outlook from manufacturers, with higher farm incomes driving a steep rise in sales.

A farm equipment index compiled by Creighton University "ballooned" to a reading of 75.9 this month, from 63.5 in February. Any reading above 50.0 indicates market expansion.

The figure, which was higher than the reading at the peak of the 2007-08 farm commodities boom, reflected farm profitability also evident in the land market, and "solid growth" in the US rural economy.

"Farm implement producers and dealers are experiencing a banner year as farmers spend their higher incomes," Creighton economist Ernie Goss said.

Industry forecasts

The comments follow forecasts from equipment groups of modest, if any, improvement in US sales this year – at least, in volume terms - after a strong 2010.

Deere & Co, the maker of John Deere equipment, has predicted a 5% rise in tractor industry sales in North America this year, with rival Agco, the owner of the Massey Ferguson and Fendt brands, forecasting a "flat" market.

And industry data for February show a mixed market, with sales of utility tractors growing by 15%, and combines by 34%, while large tractors saw an increase of only 1% and deals on row-crop tractors fell 9%, according to Deere.

Quick profit in land 

The Creighton report, based on responses from bank chief executives in 10 US states, also found evidence of growing agricultural prosperity in the US land market, where prices grew for a 14^th successive month.

One Kansas banker reported that an 80-acre piece of farmland which sold for $3,000 an acre in 2009 had resold last week for $5,000 an acre – implying a $160,000 profit and a return of 67% in two years.

Expensive diesel represented a notable threat to the brighter outlook, with a Nebraska banker saying rising fuel costs "could boost farm input prices to levels significantly cutting into farm income".