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CNH expects farm equipment demand to revive in 2027
Replacement purchases may support the sector as discretionary demand stays weak
New Holland farm equipment for sale at a Montgomery Tractor Sales store in Mount Sterling, Ky. New Holland is a brand of CNH. (Luke Sharrett/Bloomberg)
Key Takeaways:
- CNH Industrial said aging farm fleets and declining used inventory are expected to drive a machinery-sector rebound in 2027.
- Farmers face soaring fuel and fertilizer costs, drought and weaker confidence, while CNH’s agriculture sales fell sharply across the Americas.
- CNH raised its 2026 outlook, while Agco cut its forecast and reshuffled leadership ahead of Deere’s August earnings report.
The farm machinery sector is primed for a rebound in 2027 as the current fleet ages and prompts growers to upgrade, according to tractor maker CNH Industrial NV.
Many farmers remain under pressure as U.S. attacks on Iran have resulted in soaring fuel and fertilizer costs, limiting funds for new tractors and combine harvesters. Extremely dry field conditions from the U.S. Plains to Europe are also hitting fields, giving growers less confidence on yields.
Still, equipment purchases made during a peak in profits for both growers and machinery makers during 2022-23 mean farmers will have to buy something soon, at a time used inventory has been declining. That “replacement demand” will come even as discretionary purchases remain weak, said CNH, whose brands include Case IH, New Holland and Steyr.
“We’re going to approach that probably over the course of next year when the replacement demand is going to carry the industry,” CEO Gerrit Marx said on an earnings call Aug. 3.
CNH’s shares soared as much as 17%, the most since 2020, after it lifted its annual outlook for 2026 and reported better-than-expected second-quarter profit.
The company’s agriculture sales so far this year are sharply lower for North and South America, although sales of light and heavy construction machinery are higher in North America, and tractor sales are up in Asia Pacific. Marx pointed to Brazil as a potential bright spot to emerge from tough farm conditions.
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Rival Agco Corp. was less rosy when it lowered its outlook last week, while industry leader Deere & Co. is set to report results later in August.
Agco shuffled its executive suite Aug. 3, naming Damon Audia, its chief financial officer, as president of precision-planting brand PTx as well as corporate strategy. Indira Agarwal, previously chief accounting officer, succeeds Audia as CFO. Agco created its PTx segment in the wake of its $2 billion purchase of Trimble Inc. assets in 2023, an effort to build out the business to make farms more efficient in part with internet-connected machines.
“We see this transition highlighting the importance of the execution of that business turnaround,” Oppenheimer analyst Kristen Owen said in a note.
