Farmers facing high interest rates and weaker crop prices are leaning more towards renting rather than buying machinery, hitting sales of big-ticket equipment such as tractors and combines.

Deere was able to cushion the blow from softer demand and keep its margins steady by lowering production and warranty-related expenses.

Tariffs imposed by U.S. President Donald Trump have added to production costs and led to uncertainty for large industrial firms in international markets.

The company would continue to make “significant investments” in its core U.S. market, Deere said.

Peer CNH Industrial slashed its annual profit forecast earlier this month, citing a hit from lower shipments due to cooling demand and dealer destocking.

Deere and CNH struggled to keep pace with strong tractor demand in 2022, when farm income hit a record high and pandemic assistance payments gave farmers extra money to upgrade their fleets.

The world’s largest agricultural-equipment maker expects its annual net income to now be between $4.75 billion and $5.5 billion, compared to its prior forecast of $5 billion to $5.5 billion.

Its revenue for the second quarter fell about 18 per cent to $11.17 billion from last year, compared to analysts’ estimate of about $10.8 billion, according to data compiled by LSEG.

Quarterly net income fell to $1.8 billion or $6.64 per share, compared with $2.37 billion or $8.53 per share a year ago. Analysts on average had expected the company to report a profit of $5.58 per share.

The post Deere tops second-quarter estimates, trims annual profit forecast appeared first on Alberta Farmer Express.

“Today we have these electric drive meter upgrades where we can take an existing planter, say back to 2015 – a MaxEmerge 5 planter – and we can add these meter upgrades without having to replace that entire row unit,” said Taryn Fischels, precision upgrades product marketing manager for John Deere.

The move allows growers to increase their efficiency and accuracy when it comes time to put seed in the ground, and keep costs down if their current John Deere planter still has a few years left on it.

Fischels said that John Deere will start taking orders in June 2025 and kits will be ready for the 2026 planting season.

PowerStar gets revamped with four new models

At the show and getting plenty of attention from visitors at the New Holland booth was the latest PowerStar tractor. The new PowerStar comes in four models: 90, 100, 110 and 120 and range from 87 to 117 horsepower. Engine power is driven down to the wheels with New Holland’s FPT Industrial 3.6-liter four-cylinder engine on all four models.

“The PowerStar line has been with New Holland for decades. It’s really become synonymous with power, utility and comfort,” said Mike Sevick, business manager for New Holland North America. “What we’re really launching here is the next generation of those features and those benefits for customers with this tractor line.”

Want to learn more? Watch for full video interviews on John Deere’s planter upgrades and New Holland’s latest PowerStar tractor coming soon to AgDealerTV.

Organized by Kentucky Venues and recognized around the world as a premier farm trade show event, the National Farm Machinery Show welcomes as many as 300,000 visitors from across the U.S. and many other countries each year.

The post John Deere offers upgrades for planters, New Holland rolls out latest PowerStar tractor at National Farm Machinery Show appeared first on Alberta Farmer Express.

The results from the world’s largest farm-equipment maker come as U.S. manufacturers brace for the impact of President Donald Trump’s latest tariff announcements.

Trump has imposed sweeping tariffs on imports from Canada, Mexico and China. The levies on Canada and Mexico have been paused for a month, but not on China.

Trump, during a campaign speech in September, warned Deere of additional tariffs if the company moved some of its production to Mexico as planned.

The tariffs have increased uncertainty regarding the impact on U.S. farmers as soybeans, corn, wheat, and meat are particularly vulnerable to retaliatory measures from China, Canada, and Mexico.

Meanwhile, prices of industrial metals, crucial for manufacturing equipment, are rising, driven by Trump’s 25 per cent tariffs on steel and aluminum amid insufficient domestic production.

Deere reiterated its 2025 profit forecast of $5 billion to $5.5 billion (C$7.1 billion to $7.8 billion), which many analysts had labeled conservative and were anticipating potential upward revisions as the year progressed.

“Deere’s Q1 results reflect the trickiness of calling bottom in the thick of ongoing production declines,” Barclays analysts wrote in a note.

The company now expects sales in its largest production and precision agriculture segment, which includes larger tractors and combines, to fall between 15 per cent and 20 per cent, compared to its previous forecast of a 15 per cent decline.

The company said its outlook did not account for any impact from potential import tariffs by the U.S. and any retaliatory actions taken by other countries.

First-quarter net sales decreased 35 per cent to $6.81 billion (C$9.69 billion), compared with analysts’ estimates of $7.7 billion (C$10.96 billion), according to data compiled by LSEG.

Deere reported a profit of $3.19 per share, compared with Wall Street expectations of $3.11, helped by a drop in production costs.

— Reporting by Shivansh Tiwary in Bengaluru

The post Deere misses revenue estimates on subdued farm equipment demand appeared first on Alberta Farmer Express.

The world’s largest farm equipment maker is making strides towards automating manual work amid a shortage of skilled workers and high labor costs. In the agricultural sector, the challenge of finding workers to operate tractors has been a persistent issue and has been worsened by the pandemic.

“Our agriculture, construction and commercial landscaping customers all have work that must get done at certain times of the day and year, yet there is not enough available and skilled labor to do the work,” Deere chief technology officer Jahmy Hindman said.

The Moline, Illinois-based company revealed the second generation of its autonomy kit, which combines advanced computer vision, AI and cameras to help machines navigate terrains, at CES 2025.

Deere and other equipment makers such as Caterpillar have invested heavily in technology to automate off-highway vehicles such as farm tractors and mining vehicles.

Apart from two autonomous tractors, Deere also revealed a dump truck for quarries and a battery electric commercial landscaping mower – all of them will be equipped with multiple cameras to facilitate full autonomy.

Customers can also equip existing Deere tractors, articulated dump trucks and commercial mowers with autonomy kits, Deere said.

—Reporting by Shivansh Tiwary in Bengaluru

The post Deere boosts bet on autonomous tractors with new machines appeared first on Alberta Farmer Express.

Shares of the world’s largest farm equipment maker rose six per cent, lifting peer Caterpillar, which also reported a profit beat last week amid moderating demand, nearly three per cent.

Higher prices, implemented two years ago following supply chain complications and a surge in demand for industrial and agricultural equipment, have helped U.S. machinery makers to shield their profits from an industry-wide slump.

“Deere’s pricing power was reflected well in Q3 as price helped to dampen impacts from contracting volumes,” CFRA Research analyst Jonathan Sakraida said.

Deere maintained its 2024 net income at about US $7 billion, even as sales of new machines have shrunk amid a decline in crop prices and high borrowing costs, which have also forced dealers to limit inventory restocking.

U.S. farm incomes are forecast to plunge in 2024 due to a sharp decline in commodity prices, heightened production costs and shrinking government support.

“By keeping inventories in check, we have been able to maintain solid price realization,” said Deere’s director of investor relations, Josh Beal.

Deere also said it expects an improved favorable price realization in its agriculture segments in 2024 compared to its previous targets.

For the third-quarter, Deere reported a net income of $6.29 per share, compared with LSEG estimate of $5.63, while net sales and revenue decreased 17 per cent to $13.15 billion.

“We’ve prudently and proactively adjusted production schedules in our large agriculture business at a faster pace than ever before, in order to reduce field inventory in our end markets,” CEO John C. May said.

Deere said in June it would cut some production jobs and reduce salaried employees to keep a tight lid on costs.

The post Deere beats profit targets as strong pricing, cost cuts counter slow demand appeared first on Alberta Farmer Express.

The cuts will reduce “overlap and redundancy in roles and responsibilities”, Deere disclosed in a filing, following media reports from the past week about layoffs.

The news comes weeks after the company trimmed its annual profit forecast for the second time and projected steeper declines in sales of large agriculture equipment.

Lower crop prices are leaving agriculture equipment sellers with an excess of unsold tractors and combines, leading some to offer discounts and suspend new orders.

The U.S. Department of Agriculture has forecast farm income would slide 25.5 per cent to $116.1 billion (C$159.1 billion) this year from 2023.

In Canada, net cash income is forecast to decline 14 per cent to C$21.3 billion as cash receipts are forecast to fall slightly, with expenses modestly increasing, Agriculture Agri-Food Canada said earlier this year.

—Reporting for Reuters by Abhijith Ganapavaram and Nathan Gomes in Bengaluru, with files from Glacier FarmMedia

The post Deere announces job cuts to tackle slowing farm equipment demand appeared first on Alberta Farmer Express.

Farm income is expected to slide 25.5 per cent to US$116.1 billion this year from 2023, according to the U.S. Department of Agriculture, set for a second consecutive annual drop, as corn and soy prices plummet and production costs increase.

Higher interest rates have also piled pressure on farmers, leaving equipment dealers with bloated inventories, prompting some to offer discounts or even auction off machines at lower prices, forcing Deere and peers to cut production.

The world’s largest farm equipment maker now expects fiscal 2024 net income of about $7 billion, down sharply from its prior expectations of $7.50 billion to $7.75 billion.

Deere’s shares fell 3.2 per cent in early trading. Peer Caterpillar, which last month warned of weaker second-quarter sales, also slid one per cent.

The forecast implied “a very aggressive” downshift in production in the second-half of the year, Jefferies analyst Stephen Volkmann said.

Deere expects sales of large agriculture equipment to decline between 20 per cent and 25 per cent this year, compared its prior estimates for a roughly 20 per cent fall. Industry sales for large agriculture equipment was projected to fall about 15 per cent, at the low end of its previous forecast.

“There were some signs (that guidance might be impacted), but I was still surprised to see them cut guidance for the industry… It was a bit more broad-reaching than I would have expected,” M Science research analyst Alex Prudhomme said.

“Their guidance always implied that they were going to underproduce retail sales to work down inventory. Now that they’ve cut retail sales (targets) across all markets, they’re going to have to work a lot harder to achieve that goal.”

Net income for the second quarter fell 17 per cent to $2.37 billion, or $8.53 per share. Net sales declined 15 per cent to $13.61 billion. However, both beat Wall Street expectations.

The post Deere cuts 2024 profit forecast as sliding farm income stifles demand appeared first on Alberta Farmer Express.

“The fully autonomous capabilities that we have available today with our 8R in tillage applications will only continue to grow and develop as we see customers trying to address that labour availability and shortage that we see in many of their operations,” said Aaron Wetzel, vice-president of production systems for production and precision ag.

“We’ve publicly stated that by 2030, we want to have and demonstrate a fully autonomous production system for corn and soybean producers. That means every job through the beginning of tillage, planting, spraying and harvesting, we’ll be able to do that autonomously for our customers.”

Tailoring autonomous equipment first to corn and soybean producers allows the brand to reach the largest farming segment in North America, adding small grains and specialty crops capabilities as machines evolve.

That is the approach Deere has taken with its See and Spray Premium spot spray technology.

To prepare today’s new equipment for that day, the brand is beginning to offer its 8R and 9R tractors with an autonomy-ready option package. It means the tractor will leave the factory with all the hardware, software and safety systems it will need for a self-driving conversion.

The new autonomous-ready package will include rear implement ethernet, new visibility features, a back-up alarm, a 330-amp alternator, a brake controller and valve, and all the necessary connectors, controllers and harnesses.

The only additional item a farmer will need in the future to make the machine capable of autonomous operation will be the perception system, which consists of cameras and vision processing units.

Making machines capable of driving around a field is one thing. Having them control the complex operations they’re out there to perform adds another level of complexity.

“Having these tractors be easily able to upgrade into full autonomy is one of those areas we’re focusing on,” said Wetzel.

“What enables us to get there is the investments we’re making in job automation. Making machines smarter and easier to use will help our producers today and bring them along on the journey to full autonomous operation in the future.”

The move by Deere and other brands to move toward production of fully autonomous machines marks a major turning point in ag equipment evolution, one many wouldn’t have thought possible just a generation ago.

“I’ve been at John Deere 35 years and it’s amazing to see the transformation the company has gone through in the time I’ve worked with it,” he said.

“It’s astonishing. I think the pace of change is quickening. The amount of technology and new productive solutions we’re bringing to customers is only going to increase.”

But even though brands are preparing for a high-tech future, many producers may not be ready for that yet – or ever.

Wetzel said Deere understands that and will continue to produce machines with varying levels of sophistication.

“I think customers are all at a different point in their technology journey. What’s great is we offer the solutions from the very basic levels of technology all the way to full autonomy. So, wherever a customer is in their journey, John Deere has a solution for them.”

The post Deere reaches for fully autonomous fleet by 2030 appeared first on Alberta Farmer Express.

They also make impressive headlines and brand announcements.

Though several concept, prototype and even a few production machines have appeared on the scene, nearly all producers will still be sitting in their tractor cabs to get next spring’s crop in the ground.

There seems to be unanimous agreement among executives at major brands that there is still a lot of work to do before most farmers can spend their days in the farm office rather than the cab.

During an ag equipment intelligence briefing webinar in December, senior executives from four major companies discussed their views on automation and autonomy. Most agree that the road to full autonomy will involve gradually automating all the processes farm machines do while keeping an operator in the cab.

“We talk about full autonomy so much and so fluently, but the automation of (individual) processes is building blocks along the way until it’s really the whole moon shot,” said Kurt Coffey, Case IH vice-president for North America.

“I know there are generations coming in machine operation and scale that require full autonomy; if not full autonomy, then leader-follower, one machine (being operated by a person) and three following,” he said.

“To me it’s going to be a race to integrate sophisticated tech into existing platforms.”

Agco’s Brad Arnold, vice-president for Massey Ferguson in North America, agreed. He said that for his company, one of the main efforts is to provide retrofit solutions that allow producers to incorporate technology and automation into late-model machines.

“With the acquisition of Precision Planting six years ago, we really brought on this retrofit first mindset,” he said.

“We added Headsight so we had some automation for combines and the capability to further automate combines from a retrofit perspective. Appareo similarly addresses the retrofit opportunity with seeders, sprayers, spreaders, and JCA with the tech stack for autonomy.

“We’re excited to take a full automation to autonomy approach from a retrofit perspective as we bring all of these technologies together, and once we close on the Trimble JV (joint venture) to start to bring that technology into the portfolio as well.”

In November Agco announced it had entered a “transformational joint venture with Trimble, which creates an industry leading global mixed-fleet precision ag platform.”

At John Deere, there is a three-pronged focus on building an offering of fully autonomous machines and improving production data quality and usability for producers.

“I look at our future and the trends, and there are three big buckets,” said Denver Caldwell, vice-president of sales for Canada and the United States.

“They’re the pillars of our multi-year, multi-cycle strategy, first of which is automation to autonomy. There are things we can do to automate certain functions along the way to (full autonomy) to make our producers’ lives easier.

“We’ve come a long way since our first release of an (autonomous) tillage tractor in 2022, and we’ll keep going down that path to autonomy. We’ll be using automation and autonomy prep packages to get there.

“The second is anywhere management, using the John Deere Operations Centre and having data at hand. Whether it’s autonomy, logistics or implement (data), we have to be able to enable that on a broader scale.

“(Customers) are telling us it’s not just about the people in the field, it’s also about the people in the office and the people supporting the entire operation. They need that capability around anywhere management.

“The third pillar is insights to intelligence. How do we take all these ‘whats’ and distill them down to a ‘so what?’ Is it a difference that makes a difference in their lives? And if it is, what do I do about it? If we can do a better job on this, on the analytics so people can do a better job, that’s insights to intelligence.”

At Kubota, a primary focus is also on automating processes toward full autonomy. President Todd Stucke said such effort will improve the labour situation in both the agricultural and small construction sectors.

“If we can make an everyday operator as good as the best operator,” he said, “then we have a larger pool of labour. If we can automate tractors, we can solve some of the labour issues we have. It’s really making technology useful and integrating it into our equipment.”

All this technology isn’t just something brands want to build into machines. The demand is being driven by customers, according to John Schmeiser, chief operating officer and president of the North American Equipment Dealers Association, which represent ag equipment dealers across Canada and the U.S.

“It is our customers that are requesting these new efficiencies and sophistication,” he said.

The manufacturer executives agree that customer demand drives the increasingly sophisticated solutions they are developing.

“One of the things we’ve been doing here at Grand Island, (Nebraska), is going deep with our customer panel on our automation features on combines,” Coffey said during the webinar.

“People are saying, ‘I’m buying that combine because it has 20 per cent more efficiency in a varying field with an unskilled operator.’ We’ve made a lot of (tech) acquisitions in the last few years. It’s along the way to full autonomy. It exciting to see where we’re at and where we’re headed.”

The post Farm equipment manufacturers focus on technology appeared first on Alberta Farmer Express.

Shares of the world’s largest farm equipment maker were down 2.6 per cent in premarket trading.

With farmers reassessing expenses, particularly for compact tractors, Deere said it now expects net income for fiscal 2024 of $7.50 billion to $7.75 billion. This is below its prior forecast of $7.75 billion to $8.25 billion and below analysts predictions of $7.93 billion, which already marked a decline from the prior quarter.

“That’s not particularly unusual for the first year of a market correction,” said Stephen Volkmann, senior machinery analyst at Jefferies. “The lower guidance that they put out is just a factor of that lower large agriculture outlook.”

Deere, a barometer of the global economy, said operating margins contracted due to lower sales for large agriculture equipment which the company is expecting to decline 20 per cent this year. Operating profit across its equipment divisions fell 13 per cent in aggregate.

Executives have expressed caution about margin performance amid a weakening farm economy, and said Deere intends to cut equipment production in 2024. Rival CNH Industrial has also tempered investor expectations even after posting better than expected profit for the fourth-quarter, saying softening commodity prices will lead to a downturn in farm equipment demand.

Net farm income in the U.S. is set to fall 27 per cent this year to $116 billion, from its inflation-adjusted total in 2023, according to the U.S. Department of Agriculture. U.S. grains and soybeans are at three-year lows and face stiff competition for export business from South America and the Black Sea region, translating to tighter balance sheets for growers and causing them to pull back on new equipment purchases.

Deere’s sales for production and precision agriculture equipment, it’s largest division, declined seven per cent year-over-year in the fiscal first quarter. Revenue for equipment operations fell eight per cent to $10.5 billion year over year, but topped consensus forecasts of $10.3 billion.

Net income fell to $1.75 billion, or $6.23 per share, for the first quarter, beating analysts estimates of $5.21 per share, according to LSEG data.

The post Deere cuts 2024 profit view as borrowing costs hurt demand appeared first on Alberta Farmer Express.