Deere Outlook Falls Short as Farm Rebound Remains Elusive
(Bloomberg) -- Deere & Co.’s weak forecast for the year ahead reinforces the difficulty in predicting a recovery in the US farm economy as uncertainty continues to swirl over the impact of tariffs and trade deals.
Shares of the world’s biggest farm machinery maker fell as much as 5.7% in New York as the company’s first profit outlook for 2026 fell short of expectations. The forecast underscores how the agriculture sector remains in the dark even after a US trade agreement resumes crop shipments to China.
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Farmers have been grappling with President Donald Trump’s tariff policies that squeezed demand and raised costs. While the recent deal with China is raising hopes, there’s still questions on whether the ramp-up of soybean and wheat sales will be enough to shake the US farm economy out of a years-long slump.
“Deere’s widely underwhelming 2026 guidance suggests a more severe and prolonged agricultural downturn than we initially anticipated, though it offers clarity on trough earnings this cycle,” Bloomberg Intelligence analyst Chris Ciolino wrote in a report.
Deere said net income in the 2026 fiscal year will be between $4 billion and $4.75 billion. That misses the average Bloomberg estimate for $5.31 billion, and would be a drop from the $5.027 billion reported for the year just ended.
“Our organization is used to managing cyclicality, but this year we faced an additional headwind of heightened uncertainty in a rapidly changing business environment,” Chief Executive Officer John May said on a Wednesday call with investors.
May said in a statement that Deere believes 2026 “will mark the bottom of the large ag cycle.”
Even before the latest trade war, farmers had been pulling back on equipment purchases, stung by low crop prices but elevated costs for seeds, fertilizer and the machines to plant, treat and harvest crops. Trump called for farmers to go buy tractors after the US-China trade deal was announced, but it may take longer for those sales to materialize.
“It was clearly surprising that they would set such a low bar for 2026 but clearly the farmer is not running back to put orders in,” said Brian Sponheimer, a portfolio manager at Gabelli Funds, which has a position in Deere. “It’s clearly a challenged market — but I think that they are providing at the bottom of guidance a more or less worst-case scenario.”
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