Deere & Co. adjusted its annual profit forecast, now expecting net income between $4.75 billion and $5 billion, up from a previous range of $4.5 billion to $5 billion. This revision reflects a stabilizing agriculture sector, with a more significant rebound in farm machinery demand anticipated for 2027. CEO John May stated that 2026 is expected to mark the bottom of the current agricultural equipment cycle, citing positive trends in early order programs, improving used-equipment inventories, and increased customer adoption of advanced technologies as reasons for confidence in long-term value creation.
The company has been grappling with reduced demand for its large tractors and combine harvesters due to lower crop prices and increased costs for fertilizer and fuel, which have impacted farmers' spending power. In response, Deere and other manufacturers have scaled back production to manage inventories, an action expected to eventually stimulate demand. Recent increases in grain prices, with wheat reaching its highest levels since 2024 amid heatwaves, drought, and Black Sea export concerns, could further boost farmers' financial capacity and spending.
Deere's outlook contrasts with mixed signals from competitors. CNH Industrial NV recently raised its annual forecast, also forecasting a sector rebound in 2027 as aging fleets prompt upgrades. However, AGCO Corp. lowered its estimates, attributing the cut to the ongoing pressure on the farm economy from skyrocketing input costs like fuel and fertilizer.
