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December 11, 2018

Tractor Sales slide further in November

Sales of Agricultural tractors have turned further downwards in November as the impact of the drought continues to take its toll.

All up, Tractor sales in November were 15% down for the month leaving the year to date position around 2% behind last year.

All four reported categories experienced dips, most notably in the smaller size ranges. Under 40 hp tractors down 22% for the month and 9 % behind YTD. The 40hp -100 hp range also down 22 % and 6 % behind YTD.

Larger tractors in the 100hp to 200hp range were behind 2% and remain around 6% ahead of last year whilst the larger above 200hp tractors were down 2% and are 7% behind on a full year basis.

We have previously spoken of the influences that impact a tractor sale, in particular, the roles that improved technology and lower interest rates have had. Offsetting this to some degree is the renewed focus farmers appear to be applying to machine utilisation, particularly at the high end. It is perhaps not surprising that when conditions tighten up a bit, focus turns to capital utilisation and this is no different with Agricultural product. We continue to see farm rationalisation occurring and when neighbouring farms combine, there will always be the potential for greater sharing of assets. This hasn’t been too much of a priority over the last five years or so but now appears to be occurring to a greater extent leading to a lessening of demand for new product.

Sales activity continues to vary around the nation, Western Australia is having a bumper year, November up 8% year to date following a 15% increase in November.

South Australia is having a topsy turvy year, down 25% for the month but still 7% ahead of last year and the Northern Territory and Tasmania are both experiencing year’s ahead of last year.

The drought affected Eastern States have, not surprisingly recorded declining sales figures in this last month. NSW the hardest hit, down 25% for the month and 10% for the full year, Queensland down 17% for the month, 5% for the year and Victoria down 7.5% for the month and now sitting 1.4% behind annually.

Harvester Sales have limped along again in November with dealers reporting an absence of new sales and are instead focussed on trying to do deals that might see a machine held for delivery next year. On a Year to Date Basis we are now 23% behind last year.

Baler sales continue to recover with a huge 53% lift in November putting them 12% ahead of last year. Clearly there has been a lot more hay cut this year in response to the prevailing conditions.

Sales of Out-Front Mowers have dipped again, down 16% for the month and now 10% behind last year.

By year’s end we will have broken a 5-year cycle of continuously increasing tractor sales volumes and we expect 2019 to be much the same. Whilst there are areas of the market that remain strong, we believe that the impact of the drought will be felt for some time to come.

Gary Northover, TMA