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INSIGHT - 2020 looks better for ag machinery markets, but not by much


It doesn’t look like 2020 will be a banner year for agricultural equipment manufacturers.


Of all the big three listed groups – Agco, CNH Industrial and Deere & Co – only one sees growth in any of its big regional markets.


That was Agco, which foresees expansion of up to 5% in the South American tractor market.


The overall consensus is for a flat performance in most major markets, the exception being in North America, where all there groups foresee the potential for contraction, which CNH sees centred on the market for large tractors as beloved by the big arable farms.


‘Prices remain under pressure’

The trouble is, as CNH put it, the “muted industry environment in the major markets in which we compete, where [agricultural] commodity prices remain under pressure”.


That puts pressure on farm income, for which the outlook is particularly poor in the US.


In the US Department of Agriculture puts it, “all categories of farm businesses except hogs and dairy farms are expected to see average net cash farm income fall in 2020”.


The outlook for wheat growing is especially poor, with net cash farm income seen falling 26%, with the figure for soybean producers estimated down 20%, cotton down 17% and corn down 12%.


Milk price setback

Still, in the European Union, “farm income is expected to soften in 2020, driven primarily by lower milk prices, partially offset by more normal crop production”, said Martin Richenhagen, Agco’s German-born chief executive.


The group’s upbeat assessment of South America is based on expectations of improved demand in Brazil, where “farmers should benefit from a weaker real and strong crop production”.


Even so, in Argentina, where growers are worried over raised export taxes besides the threat of further currency deterioration, demand “is expected to remain at low levels”.


The one consolation for producers is that in 2020 equipment markets are not expected to fare too much worse than in 2019, with improvement in South America.


Still, it is small wonder that equipment companies are looking to cost savings to protect their profitability - especially when farmers, and regulators, are demanding higher-tech equipment which requires extra investment to develop.



Forcasts by major ag equipment manufacturers for 2020 markets
Agco CNH Industrial
Deere & Co*
2019 performance**
North America tractors
Down 0-5%

- Flat for small tractors

- Down 5% for large ones

Down 0-5% Down 1%
South America tractors
Up 0-5% Flat Flat Down 16%
European tractors
Down 0-5% Flat Flat Down 2%
North America combines
n/a Down 5% n/a Down 6%
South America combines
n/a Flat n/a Down 5%
European combines
n/a Flat n/a Down 18%

* Deere data for total agriculture and turf market, and for year to the end of August.

** Data from Agco


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