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September 9, 2018

Tractor Sales Slow as effects of Drought begin to bite.

Sales of Agricultural Equipment dipped in August in a sign that the effects of the drought being experienced in the Eastern States begin to show.

Tractor Sales in NSW in particular where greatly impacted, down 25 % on last month and are now 3 % behind on a year to date basis.

The picture in Victoria was not much better, down 4% for the month and now in line in last year.

In Queensland, the “damage” was contained somewhat, only 1% behind last month and now 2% behind year to date.

The picture elsewhere in the country is starkly different.

Sales in West Australia were again strong, up 10% on last month and remaining 10% ahead year to date. Business is booming in South Australia, up 14 % for the month and now up 11% for the year.

Finally, the NT reported sales up 60% for the month and sales in Tasmaina were again up, this month a further 5%.

Taking a look at the four reporting categories for tractors, we can see that the small under 40 up size ranges slowed noticeably, 17.5% behind last month and now 5% behind year to date.

The picture is similar for the 40-100 range, down another 8% but marginally higher year to date.

The large end of the scale above 200hp is suffering, down 8% for the month and now 9% behind year to date.

The only bright spot appears to be in the 100-200 up range, up 4 % for the month and sitting 9% ahead for the year. Indeed, it is this size range that appears to be doing the “heavy lifting” when it comes to the tractor market.

The commonly held view appears to be that we may have reached a bit of a saturation point when it comes to the large end of the range and the smaller tractors, long dominated by the leisure market, may also be experiencing a pause after running hot for so long.

Sales of combine harvesters have not yet been reported in any great numbers as the window for deliveries begins this month.

Most dealers are playing their cards close to their chest in terms of the success or otherwise of this season. The West is buoyant but there is a fair degree of pessimism in the Eastern States.

The full picture will unfold in the coming weeks.

Baler sales remain subdued, down another 4% in August and now 16% last year. Once again we are seeing a dampening of demand here in response to the broader market.

Finally, sales of out front mowers are down a further 16% in the month, now 6% behind for the year.

Not surprisingly, the industry’s run of good fortune appears to be slowing for the first time in 5 years.

Drought combined with a bag of economic forces including exchange rate, interest rates and improving overseas demand are all set to have an impact.