Utility Tractor SALES RED HOT

[HayDR]

MARCH Tractor Sales up 24.9%

Utility tractors (40-100hp) are the tractors by in large that are used for hay production and maintenance mowing.

Better corn prices have pushed larger row crop tractor sales up 14.3%.

CUT sales increased 6% was the first increase since early last year.

 

[N80]

Interesting numbers. I'd love to see it broken down by region. The utitlity tractor numbers surprise me and I wonder what is accounting for it. I've noticed a trend since I've been on TBN for the last that it seems like more typical CUT buyers are opting for larger tractors like some of the Grand L and M series Kubota. Most of these folks are not farmers by profession. I wonder if this is what is driving those sales or if there is actually something in the commercial/Ag market that is driving them.

Also, I have a 45 hp tractor which is on the large end of the CUT class, but its build and weight definitely make it a CUT and not a utility tractor. So there is probably a fair percentage of larger CUTs included in that Utility class sales figure.

 

[LoneCowboy]

no no no
we want utility to be down for april/may when my utility tractor comes in, so the cash back deal is better
crap.

 

[mjarrels]

I know that my Kubota dealer has about twice the number of tractors on his lot then normal.

mark

 

[Bob_Skurka]

MARCH Tractor Sales up 24.9%

Utility tractors (40-100hp) are the tractors by in large that are used for hay production and maintenance mowing.

Better corn prices have pushed larger row crop tractor sales up 14.3%.

CUT sales increased 6% was the first increase since early last year.

I'm actually surprised the CUT market is up. It has been somewhat flat for a while, I think because people with 2 to 5 acre lawns started to buy large 60" and 72" ZTR mowers. If you look at the corn prices, you can see that many of those corn farmers are also buying new equipment and New Holland seems to be getting some benefit as their stock price is climbing. Ditto Agco's stock price.

CNH stock is up over 30% since the first of this year.

Agco stock is up almost 20% since Jan 1.

Deere over 10% since Jan 1.

Kubota, probably because it sells smaller tractors, appears to be flat. I would expect that the stock price of Kubota, which has 60% of the CUT market would be reasonably flat since it has not really penetrated the heavy agricultural markets where CNH, Agco and Deere obviously dominate the planting and harvesting equipment.

 

[BigDamnFool]

I wonder if there is any corelation of those numbers to people who visit this site and ask advice on buying a new or first tractor. Plenty of people here seem to think you "need" 300 hp to mow a 1/2 acre lot and we all seem to sell people up to the next level of machine. Just a thought.

Tiny

 

[Farmwithjunk]

I'm actually surprised the CUT market is up. It has been somewhat flat for a while, I think because people with 2 to 5 acre lawns started to buy large 60" and 72" ZTR mowers. If you look at the corn prices, you can see that many of those corn farmers are also buying new equipment and New Holland seems to be getting some benefit as their stock price is climbing. Ditto Agco's stock price.

CNH stock is up over 30% since the first of this year.

Agco stock is up almost 20% since Jan 1.

Deere over 10% since Jan 1.

Kubota, probably because it sells smaller tractors, appears to be flat. I would expect that the stock price of Kubota, which has 60% of the CUT market would be reasonably flat since it has not really penetrated the heavy agricultural markets where CNH, Agco and Deere obviously dominate the planting and harvesting equipment.

I'm a little skeptical about connecting the increase in sales of 40 to 100 hp machines entirely to the rise of corn prices, but obviously it has SOMETHING to do with the spike. In todays AG world, most grain farmers, at least the ones successful enough to be buying new tractors, will be buying much bigger than 100 hp. That market is generally thought of in terms of cattle/hay production. The cattle farmers will actually suffer because of higher grain prices. As corn prices INCREASE, farmers allot more acreage to corn. That results in the total amount of acreage devoted to soybeans, wheat, and other cash grains to DECREASE, driving those commodity prices up as well. Those higher grain prices effect feed prices, which in turn cuts into the bottom line for cattle ranchers. Farmings "law of physics" is something to the effect of "What goes up must drag something else down". Let's see how long the spike sustains itself. WHen the grain pipeline reaches the feed market, we'll see how that effects sales longterm. Those feed prices should begin to reflect increased grain prices (along with ANTICIPATED increases) by mid summer. By the nature of the beast, farmers have always looked beyond the immediate future for major investments. Most won't make major cash expendatures as a knee-jerk reaction to a change in market prices. HOPEFULLY, the spike in sales won't be followed shortly by a significant downswing in sales a few months down the road.

 

[HayDR]

Corn Gluten and Ethanol plants have by products that are being feed to calves. Most operators that are backgrounding or feed calves have switched to by products known as brewers grain or corn gluten. They currently sell for $110 to $140 a ton. Usually higher corn prices mean lower calf prices. What has happened now is Ethanol has become the cow-calf operators friend because Ethanol gives cow/calf operators a cheaper feed source. Yes there will become a point where higher corn prices will depress calf prices but we are not there yet. We have sold 5 & 6 weight calves the last 3 weeks and the average has been $1.12 per pound. Also realize that the corn price also has an effect on the ethanol plants profits. Ethanol plants can only pay so much and make a profit based on oil price at that point in time.

50% of the cattle in the USA are owned by operators that have 50 head or less. There are 97 million head of cattle in the USA. These smaller operators primarily purchase 40-100 HP utility tractors because the produce and feed round bales of hay to those cattle. CUT's just don't have the mass to do serious round bale hay production and feeding. CUT's can be used in some aspects of round hay production but lifting and handling large round bales will quickly wear-out CUT's spindles, loaders and 3 point hitches.

 

[Farmwithjunk]

Corn Gluten and Ethanol plants have by products that are being feed to calves. Most operators that are backgrounding or feed calves have switched to by products known as brewers grain or corn gluten. They currently sell for $110 to $140 a ton. Usually higher corn prices mean lower calf prices. What has happened now is Ethanol has become the cow-calf operators friend because Ethanol gives cow/calf operators a cheaper feed source. Yes there will become a point where higher corn prices will depress calf prices but we are not there yet. We have sold 5 & 6 weight calves the last 3 weeks and the average has been $1.12 per pound. Also realize that the corn price also has an effect on the ethanol plants profits. Ethanol plants can only pay so much and make a profit based on oil price at that point in time.

50% of the cattle in the USA are owned by operators that have 50 head or less. There are 97 million head of cattle in the USA. These smaller operators primarily purchase 40-100 HP utility tractors because the produce and feed round bales of hay to those cattle. CUT's just don't have the mass to do serious round bale hay production and feeding. CUT's can be used in some aspects of round hay production but lifting and handling large round bales will quickly wear-out CUT's spindles, loaders and 3 point hitches.

And that makes better sense than any explaination I've read so far. I've read in a few different publications where Kentucky is now the #1 beef cattle producing state east of the Mississippi River. I know from first hand experience most of us had those small herds. (I peaked at 25 head in 1991) I don't see those operations as "rich" as bigger western cattle operations. I tried to play that to my advantage. (Through bad times, I didn't LOOSE as much as the big guys) Maybe I'm overly cautious in my old age, but I'd be the last one in line to buy a new tractor for a small operation with the unsettled nature of todays economy. Then again, I was buying new equipment through the 1980's when everyone else was loosing the proverbial shirts off their backs, and I made that work just fine.

Agreed, the compact tractor market is almost a seperate entity. A few may end up on commercial ag operations, but generally, they're homeowner/hobby farm equipment.

Like so many folks, I'm having a difficult time making ANY sense of todays economy.

 

[Bob_Skurka]

I'm a little skeptical about connecting the increase in sales of 40 to 100 hp machines entirely to the rise of corn prices, but obviously it has SOMETHING to do with the spike.

Like so many folks, I'm having a difficult time making ANY sense of todays economy.

I'm not well versed in farming, but the farmers I know are typically smaller farmers, cropping under 1000 acres and alternating their crops between corn and soybeans with some small time hay production tossed into the mix. My area is too populated for bigger farms and individual field sizes are often fairly small, often only 20 to 40 acres. Many of these farmers also have other jobs because their farming is not able to pay all the bills. Many of these same farmers also have small herds of cattle, often just a few head. One of my neighbors typically has 4 to 6. Another farmer close to me has a couple dozen. These size farms seem to rely on fairly modest size utility tractors.

Interestingly, on one of MSNBC financial analysis shows just this week, they were talking about the connection between the upswing in sales of AG equipment, stock prices, and corn commodity prices. There is certainly some connection, just not sure how to put it all together.

I totally agree with you that trying to figure out the current economy is a brain teaser!