U.S. tractor sales took their first dip in a year last month. The decline -- 3.9% compared to May 2020 -- was led by a falloff in unit sales of small tractors. Sales of large, four-wheel-drive tractors, on the other hand, rose sharply -- up 62.2% last month compared to May 2020.
The May 2021 Ag Tractor and Combine report, released by the Association of Equipment Manufacturers on Thursday, shows tractor sales are experiencing their first downward blip in a year.
The leading cause of the decline was an 8.7% drop in sales of sub-40-horsepower tractors compared to May 2020. That represents a decline of about 2,200 units -- and it was enough to pull down the entire tractor segment.
"While the sub-40-hp segment fell some this month, they're still up a strong 26% year to date," said Curt Blades, senior vice president of ag services at the Association of Equipment Manufacturers. "That is slightly ahead of the overall farm tractor market, and, once again, over and above already-strong 2020 sales gains."
Sales of sub-40-hp units have been on fire for months. Even with May's slight dip, sales of small tractors in 2021 are up more than 20,000 units over the same five-month period in 2020.
There has been industry speculation that unit sales of small tractors have been bolstered by COVID-19. Sales, according to this analysis, have gone to small acreage owners working remotely at home -- and newly interested in property improvements -- and to landscapers who found demand from locked-down property owners wanting improvements.
Perhaps small-tractor demand is cooling. But one month's performance does not make a trend.
Sales of four-wheel-drive farm tractors are strong and might be responding to commodity prices, to farmers wanting to reduce tax liabilities or, perhaps, manufacturer incentives.
"With cash corn and soybean prices at their highest levels in eight years, it wouldn't be surprising to see farms take advantage of the higher cash flow to upgrade equipment," said DTN Lead Analyst Todd Hultman.
Age of the equipment fleet is a reasonable reason to buy.
Robert Crain, AEM vice chair and senior vice president and general manager North America for AGCO Corporation, told industry analysts earlier this year farmers seemed primed to make significant investments in equipment, perhaps the largest the industry has seen since 2015. The national farming fleet is as "old as we have ever seen it," Crain said. "It is ready for replacement."
Four-wheel-drive sales numbers are good. Manufacturers sold 253 four-wheel-drive units in May 2021. That compares to 156 units sold in May 2020. For the year, four-wheel-drive tractor sales stand at 1,180 through May. That's up 19.9% -- or 196 units -- over the same period last year.
Sales of these largest farming tractors are buttressed by sales of commercial farm- and ranch-sized 100-plus-hp tractors. Sales of 100-hp, two-wheel-drive tractors turned sharply higher in May, up 28.6% from a year ago. For the year, sales of these tractors are up 23% -- nearly 1,600 units.
Combine sales have turned strong. They were up 33.2% in May 2021 over the previous May (361 combines sold last month, compared to 271 a year ago). For the year, combine sales are up 13.1% over the first five months of 2020 (1,774 combines sold in 2021, compared to 1,569 sold January-May 2020).
Dan Miller can be reached at email@example.com
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