Deere & Co. has narrowed its annual profit outlook, with the company’s Chief Executive Officer John May stating that 2026 is expected to mark the bottom of the current agricultural equipment cycle. The company now estimates its fiscal year net income to be between $4.75 billion and $5 billion, a slight increase from its previous forecast of $4.5 billion to $5 billion. This revised outlook comes as the agriculture sector stabilizes, with a more pronounced recovery in farm machinery sales anticipated for 2027.
The pressure on farm equipment sales has been ongoing for several years, primarily due to relatively low crop prices and elevated costs for fertilizer and fuel, which have reduced farmers' spending power. However, Deere and other manufacturers have strategically reduced production to manage inventory levels. Rising grain prices, with wheat recently reaching its highest levels since 2024 because of heat waves, drought, and Black Sea export concerns, could potentially lead to increased farmer spending.
Deere's revised outlook follows mixed signals from its competitors. CNH Industrial NV recently raised its annual outlook, foreseeing a sector rebound in 2027 as older machinery prompts upgrades. Conversely, AGCO Corp. trimmed its estimates, citing high input costs like fuel and fertilizer as ongoing pressures on the agricultural economy. Deere's confidence in a 2027 recovery is bolstered by early order program trends, improving used-equipment inventories, and increasing adoption of advanced technologies by customers.
