The Association of Equipment Manufacturers releases a monthly report of equipment sales offering some insight into how the market is doing. The November report released earlier this month shows that 2013 was an even better year - overall - than 2012. And given that 2012 was strong that's saying something.
As the year comes to a close (that Section 179 tax benefit expires next Tuesday), farmers may be scrambling to take delivery of new machines, which will make the December report even more interesting.
In November, there was some softness in four-wheel drive tractors comparing the same 11-month period with the year-earlier timeframe. But overall farm tractor sales are up nearly 10% for the 11-month period when compared to 2012. It's good news.
Looking at inventories, it appears the industry is sitting on about 6 months of machinery in the under-40 class and in the 40 to 100-hp class. For 100-plus hp tractors, there are fewer machines out there with just four months of inventory on hand. Rising inventories sometimes offer farmers a chance to bargain as manufacturers help clear out dealer lots.
There are a fair share of low- and no-interest loan programs out there too.
On the combine side, it appears manufacturers are just keeping up. The latest AEM report shows there's about two months of inventory in the field based on sales. At this time of year, it makes sense for combine inventories to be tight - if it hasn't sold by November it probably won't sell until spring.
There was a time when these AEM Flash Reports showing farm machinery sales and inventories were a study in the decline of the industry. As sales slipped and inventories rose it was clear that companies were working hard just to move equipment. For the last five years, however, that hasn't been the case.
Going into 2014, we'll be watching this report for signs of machinery industry health. The changing nature of how you buy equipment and the way companies sell it could cushion the blow of a softer crop price market. That remains to be seen. And we'll keep you posted.