The latest Rural Mainstreet Index says 74 percent of bankers still expect equipment sales to decline in 2017. At the National Farm Machinery Show, equipment manufacturers say inventory on dealer lots is in a much better position compared to 2016.
"Looking at inventories in general, it's in better shape,” said Charlie O’Brien, senior vice president of Association of Equipment Manufacturers. “Is where we want it to be yet? It might not be quite where we want it to be, but it's certainly in better shape than over the last two years.”
"If you look at the market, we've obviously gone through a correction from some of the high volumes in the recent past, but coming down to what I would assume to be a new normal,” said Joe Miller, regional sales director with Case IH. “While margins maybe not as good as what they once were, they’re still operational.”
"We continue to sell planters and we sell some grain carts at this time the year—a little bit better than where we're at last year," said Mike Gryp, senior district sales manager with Kinze.
While smaller, lower horsepower machines saw the biggest buying momentum in 2016, Case IH says to kickoff 2017, combine purchases are performing surprisingly well in Indiana.
"From a buyer's standpoint, I can speak on my region,” said Miller. “We’ve been having a really great and exciting combine year. We continue to do well with tractors things like the Quadtrac.”
Equipment manufacturers largely say the 2017 outlook is for sales to stay flat. That consistency is also ringing true in the lending community.
"I feel that farmers and ranchers are in an equivalent position to where they were a year ago,” said Mark Tangeman, senior financial officer for Farm Credit Mid-America. “However, they did come through 2016. Some of our best-case scenarios were that they did not go any further backwards. In itself, that has given many individuals optimism along with an uptick in the grain sector, especially in the soybean market.”
"The reason the moods were better [is because] people are looking at the numbers and figuring out that there still some really good opportunities for them in the marketplace,” said Alan Hoskins, CEO of American Farm Mortgage. “They do not listen to some of the negative rhetoric. They've sat they'll look at the numbers worked with their lenders, worked with their accounts, and I think that they are well aware of where things are now."
To close out 2016, Hoskins said about 20 to 25 percent of producers faced negative cash flows, and he says the situation is about the same today.
"The balance sheets are, in some cases, a little stronger than we anticipated. because of better marketing,” said Hoskins. “But I would say that number still in that same range.”