When three manufacturers who compete with each other say the same thing, it is usually because the thing is true. The consolidated read on 2026 is that the farm machinery market is at the bottom of its cycle — and that recovery, when it comes, shows up in 2027.
John Deere put it plainly: 2026 should mark the floor of the agricultural equipment cycle, even as the company still guides to annual sales declines in key regions. After a quarterly result that beat estimates, it raised the low end of full-year net income guidance to a range of US$4.75 billion to US$5 billion — a respectable number, but one that follows a 29% drop in the prior fiscal year’s profit.
The size of the contraction
Competitor data confirms the diagnosis. CNH guides agriculture segment sales to land between flat and 5% below the prior year while it chases cost efficiency and manages fast-moving trade policy. AGCO saw net sales fall 13% in 2025, a reduction of more than US$10 billion.
At retail the picture matches: North American tractor sales across all manufacturers fell 8% in the first quarter of 2026 against the same period a year earlier.
The variable nobody had in the model: tariffs
Tariff cost has become a material line in manufacturer results. Deere projects roughly US$1.2 billion in tariff expense for fiscal 2026, running at about US$300 million a quarter. AGCO estimates up to US$110 million in 2026, against US$40 million in 2025.
That cost does not evaporate. It is absorbed in margin, passed through to price or offset with production cuts — and in practice all three paths are being used at once.
Why underproduction is good news for the buyer
Manufacturers with a heavy U.S. customer base have deliberately been building below demand to burn down dealer inventory. That is painful for the manufacturer and favourable for the buyer, for two reasons.
First, high inventory on a dealer lot is what produces aggressive discounting. Second, once underproduction works and stocks normalise, negotiating power swings back to the seller. The bargaining window exists, but it has an expiry date.
How to negotiate in a bottom-of-cycle year
Separate machine price from cost of capital. In a weak market the real discount usually hides in the subsidised finance rate rather than the sticker. Comparing offers requires looking at total cost across the contract, not the size of the instalment.
Negotiate the used unit as seriously as the new one. In a downturn, the resale value of your current equipment falls along with the market. The gap between a good and a poor trade-in appraisal frequently exceeds the discount won on the new machine.
Consider a retrofit before a replacement. Plenty of farms replace an entire tractor when what they actually want is the technology on board. Auto-steer and section control kits from Trimble or Topcon install across mixed fleets and deliver much of the gain for a fraction of the outlay.
Put parts availability in the contract. In a period of reduced production, supply chains get more fragile. Guaranteed response time and availability of critical components are worth more than a percentage point of discount.
Look past the obvious badges. Kubota in the low and mid horsepower range, and specialists such as Stara and Jacto in implements and spraying, gain ground precisely during tight cycles, when buyers start comparing cost per hectare instead of brand loyalty.
What to watch if you want to time it
Three indicators anticipate the turn better than any headline: new machine inventory levels at dealerships, used equipment prices at auction — which always react before new — and the ratio between grain price and machine cost.
Historically, equipment market recovery follows farm income recovery with a lag of two to three quarters. If corn and soybean prices hold a better level through the first half of 2027, machinery demand responds after it — and the discount window closes.
The used market is the most honest thermometer
Anyone who genuinely wants to know where the cycle sits should follow used equipment auctions rather than manufacturer press releases. The secondary market reacts first and lies less: it shows what buyers will actually pay when there is no subsidised rate or factory bonus dressing up the offer.
In a down cycle the pattern repeats. Low-hour combines and high-horsepower tractors hold value reasonably well, because they remain the direct alternative to expensive new iron. Mid-range machines and generic implements depreciate quickly, since they compete against stranded dealer inventory being cleared at promotional prices.
For anyone planning to sell a machine, the practical implication is direct: in a weak market the time to negotiate is ahead of the season window, while buyers are still looking for replacements, not afterwards, once everyone has realised there is surplus equipment sitting on lots.
Replace or stretch?
The right question is not whether the market is cheap. It is whether your fleet is expensive. High-hour machines consume more in corrective maintenance, break down in critical windows and drag operational throughput. When the cost of unavailability during planting or harvest exceeds the difference in payment, stretching the asset stops being a saving and becomes a risk.
A down cycle is good for operations with cash and a genuine need to renew. For anyone stretched thin, the better decision remains disciplined preventive maintenance and smarter use of what is already in the shed.
Learn more about machinery, markets and farm management at www.farmfor.com.br.
