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March 10, 2020

Challenges continue for Tractor Sales in February 

Tractor Sales in February just failed to meet last year’s level, falling short by 2% compared to last February now sitting 8.5% for the 2020 year to date.

Whilst there was some very welcome, widespread rainfall throughout February, it will take some time to translate to improved sales and judging by the level of optimism being seen in the market, an overall improvement is hoped for.

Optimism can be fleeting however as at the time of writing the ASX has suffered its biggest one day fall since the GFC and the longer term impact of the Corona Virus Pandemic remains unclear.

As the coronavirus continues to spread around the world, the outbreak is having a severe impact on China’s foodservice and on-trade channels.The outcomes could become “more serious and longer-lasting” if the virus is not contained in the short term, according to agribusiness banking specialist Rabobank. But the extent of the impact on Australia’s agricultural sector will be limited in the short-term and will depend on how quickly the virus is contained, Rabobank said in a recently-released report by its China-based research team.

In the report, titled ‘Recent Coronavirus Impacts on Chinese F&A’, Rabobank said “disruptions are being experienced across the entire food and agri (F&A) supply chain”. “Given what we have seen on the ground, along with news received from major chains – for example, the closure of stores by Starbucks, Haidilao, McDonald’s, and Yum China – potential revenue losses for both retail and foodservice for the Chinese New Year week could range from 20 per cent to 80 per cent – a loss of between $USD 31 billion to $USD 124 billion across retail and foodservice,” the report said.

While the report said a quick and effective containment of the virus could lead to a rapid bounce-back, the longer the virus is uncontained beyond March, the more extensive, sustained and structural the impact will be on the F&A chain.

The story in February was a little more positive due mainly to the lift in sales in Victoria which was up 13% on the same month last year and is now 6% ahead for the year so far.

Activity in the Northern states remains subdued with NSW down 6% on last February ,16% down year to date and Queensland down 11% and now 18% behind last year.

The story in the West is somewhat downbeat with Western Australia 7% down for the month, 4 % down YTD and South Australia a further 6%, now 13% behind last year.  Finally, the strong run in Tasmania continues, 6% up for the month and now 22% ahead for the first 2 months of the year.

February sales were once again strongest in the 100 to 200hp (75-150kw) category, up another 9 %. The 200hp (150kw) and above range was down 6% for the month, the 40 to 100hp (30-75kw) range was also down 9% and the under 40hp (30kw) range again struggled, down 5%.

It’s this smaller “leisure” market that we expect to struggle a little over the coming months. Traditionally, this market has been sensitive to the general well being of the economy and with recessionary conditions imminent, demand could suffer

Conditions for Combine Harvester Sales continue to be very challenging with only a small number of sales completing again in February, as previously stated, the forward orders position is not great so most business will be completed from existing stock, of which there appears to be plenty.

Baler sales have taken a bit of a dip again in February and are now down 36% on last year. Expectations remain high though for a very strong year once again and finally, sales of Out Front Mowers jumped in February and are now 10% behind the same time last year.

TMA Conference – 2020
Please save the date, 21st July 2020. More information re ticketing on the TMA website shortly.
The Conference will be held at Hyatt Place Melbourne, Essendon Fields.

Gary Northover, Executive Director