Tractors would likely be moving at a quicker rate this year as farmers across rural America need to replace some aging machines. However, Bloomberg says there is very little movement of farm machinery in the U.S., plus European production is being hampered by shortages across the industry supply chain.
Trade war uncertainties and low crop prices kept farmers from shelling out cash to replace their implements. Now the uncertainty brought on by the COVID-19 pandemic is only making matters worse as no one can say for certain how long it will last or how much it will damage the economy.
Both Deere & Co and AGCO Corporation say they’ll be cutting back their operations. The move by Deere comes just a month after it announced an unexpected boost in earnings and maintained its early-year positive outlook for stabilization in the ag economy. Now that they can’t forecast the future with as much confidence, the company has changed direction.
Large-tractor sales are already down 50 percent below their peak level, which Bloomberg says is normally a sign that farmers have a significant need to replace their equipment.
As the U.S. shuts down to stem the spread of the coronavirus, Deere will be reducing some operations and closing others. In Europe, production has already been significantly reduced or suspended in several AGCO facilities as the virus spreads across the continent.