Self-Propelled Sprayers Top Equipment Forecasts for 2005

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Self-Propelled Sprayers Top Equipment Forecasts for 2005 Vol. 11, Issue 12 News, Information & Analysis for the Ag Equipment Marketer April 15, 2005 Self-Propelled Sprayers Top Equipment Forecasts for 2005 The Assn.of Equipment Manufacturers predicted to decline by 8.8% and 5.2%, the year-to-date data (through March) released its 2005 State of the Ag respectively. Self-propelled combines generally supports the AEM forecast. Industry Outlook on April 6. Manufac- are also seeing negative retail sales in Most other categories of farm turers increased their 2005 forecasts the U.S. and Canada, with declines of equipment are expected to see an for farm equipment sales compared to 2.9% and 6.6%, respectively. increase in sales.The strongest growth the previous 2005 forecast issued in “The revised 2005 outlook for in the U.S. is predicted for self- June of 2004, likely in response to farm equipment revealed improved, propelled sprayers, with an increase stronger-than-expected 2004 retail yet still negative,growth expectations of 8.8%, followed by gains in farm sales and modestly higher year-to-date for combines and row crop tractors,” loaders (3.9%),field cultivators (3.8%), demand. All major categories in the says Robert McCarthy,R.W.Baird.“Four- air seeders/drills (3.2%).The greatest U.S.and Canada,with the exception of wheel drive tractors are now expected slowdown in U.S.sales is predicted for 4WD tractors,were revised upwards in to decline 9% year-year,vs.a previously forage harvesters and rectangular the latest forecast, with the most forecast 7% decline, while utility balers, at declines of 4.7% and 4.4% noticeable uptick seen in combines tractor sales are expected to increase respectively. (now -5% vs. -16%). 1% this year, vs. the previously In Canada, self-propelled sprayer Based on survey responses from expected 6% decline.” He added that sales are also expected to lead all 40 farm equipment manufacturers,the Continued on page 2 results of the survey are found in Table TABLE 2. FACTORS 1. As shown, retail sales of 2-wheel drive tractors are expected to grow INFLUENCING FUTURE U.S. SALES 2005 1.4% in the U.S. and 6.2% in Canada, Factor Significantly Modestly About Modestly Significantly while sales of 4WD tractors are Up Up the Same Down Down FINANCIAL TABLE 1. 2005 AG Credit Availability 3% 39% 59% Interest Rates 3% 78% 14% 5% EQUIPMENT SALES Government Programs 3% 22% 50% 25% PREDICTIONS FOR THE Farm Cash Receipts 6% 44% 11% 39% U.S. AND CANADA Net Farm Income 3% 44% 14% 36% 3% CROP PRICES/ACREAGE U.S. Canada Corn 21% 46% 25% 7% 2WD Tractors +1.4% +6.2% Soybeans 21% 36% 29% 14% 2WD Under 40 PTO +3% +9% Wheat 28% 48% 21% 3% 2WD 40-100 PTO HP 0 +6% Planted Acreage 21% 69% 10% 2WD Over 100 PTO HP -4.8% +1.2% Grain Exports 7% 39% 36% 18% 4WD Tractors -8.8% -5.2% Self-Propelled Combines -2.9% -6.6% LIVESTOCK/DAIRY PRICES Rectangular Balers -4.4% +7.6% Beef 3% 39% 39% 19% Round Balers +0.5% +5.3% Milk/Dairy Products 16% 56% 28% Forage Harvesters -4.7% +3.7% Hogs 21% 55% 21% 3% Planters (all) -3.1% +3.5% FARM EQUIPMENT Mower Conditioners -0.5% +6.2% Operator Attitude Windrowers/Swathers +0.1% -4.4% Toward Purchase 6% 42% 47% 6% Field Cultivators (all) +3.8% -1.0% Prices of New Equipment 33% 56% 6% 3% 3% Farm Loaders +3.9% +4.3% Prices of Used Chisel Plows +1.4% -7.5% Equipment for Sale 14% 64% 14% 8% Disk Harrows (all) +2.5% 0 Quantity of Used Air Seeders/Drills (all) +3.2% -2.8% Equipment for Sale 33% 44% 22% Self-Propelled Sprayers +8.8% +8.5% Replacement Demand/Need 3% 39% 58% The contents of this report represent our interpretation and analysis of information generally available to the public or released by responsible individuals in the subject companies, but is not guaranteed as to accuracy or completeness. It does not contain material provided to us in confidence by our clients. Individual companies reported on and analyzed by Lessiter Publications Inc., may be clients of this and other Lessiter Publications Inc. services. This information is not furnished in connection with a sale or offer to sell securities or in connection with the solicitation of an offer to buy securities. 2-Wheel Drive 4-Wheel Drive Total Farm Tractors Retail Sales Tractors Retail Sales Tractors Retail Sales 230,000 20,000 4,000 800 235,000 20,000 227,848 3,604 231,135 225,000 224,795 19,000 3,500 750 230,000 228,399 18,794 19,000 3,287 18,114 718 220,000 18,000 3,000 680 700 225,000 17,767 18,000 17,049 215,000 17,000 2,500 650 220,000 17,000 210,000 16,000 2,000 600 215,000 16,000 205,000 15,000 1,500 550 210,000 15,000 0 6.5% 0 0 6.5% 0 0 6.5% 0 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 2004 2005 U.S. Canada U.S. Canada U.S. Canada machinery sales with a gain of 8.5%, by 59% of respondents. followed by rectangular balers (7.6%) For U.S. sales, 44% see farm cash Self-Propelled and mower conditioners (6.2%). receipts and net farm income as being Combines Retail Sales Lagging sales are anticipated for chisel modestly up,with similar numbers for 7,000 1,564 1,600 plows (down by 7.5%) and Canada (45% and 48%, respectively). 6,683 6,500 6,436 1,500 windrowers/swathers (down by The majority said planted acreage will 1,426 4.4%). be about the same as last year (69% 6,000 1,400 Risk Factors — Agricultural equip- U.S. and 74% Canada). U.S. grain 5,500 1,300 ment manufacturers forecast antici- exports are expected to be about the 5,000 1,200 pated changes in 20 factors that have same by 36% and modestly up by 39%, emerged as key influences on the sale and Canada exports about the same 4,500 1,100 of new equipment.Table 2 shows the say 52% and modestly up say 35%.The 0 6.5% 0 results. A summary of how manufac- impact of beef prices is expected to 2004 2005 2004 2005 U.S. Canada turers view these risk factors for the have a greater impact on Canadian U.S. market is shown in Table 2. sales than on U.S. sales (modestly up Interest rates are expected to be 39% U.S. and 48% Canada).A total of equipment is seen as modestly or signif- “modestly up”in the U.S. and Canada, 94% of the manufacturers expect the icantly up as a factor for U.S.and Cana- as noted by 78% and 55% of the attitude toward purchases to make an dian sales by the majority of respon- respondents,respectively.Credit avail- equal or positive contribution to dents. Less changes are expected for ability is predicted to be about the demand growth in 2005. the quantity of used equipment and same in the U.S. and Canada, as noted The prices of new as well as used replacement demand. Chart Omission President Backs Off Cutting Aid to U.S. Farmers McCormick Tractors pointed out an omission in “U.K. Tractor Sales: After two months of fierce resistance from of government payments. According to Deere Loses Ground,Yet Retains Top farmers and Congress,the Bush adminis- the Dept.of Agriculture,8% of producers Position Over New Holland,”which tration dropped an effort to cut govern- receive 78% of subsidies. appeared in the March 15, 2005 ment payments to farmers on April 12. Agriculture Secretary Mike edition. While the text contained The president asked Congress in Johanns told key senators that while the appropriate figures, the pie February to slash billions of dollars from spending must be reduced to hold chart did not reflect McCormick’s payments to large farm operations,drop- down the federal deficit, he is willing 1.1% market share gain in 2003.“In ping the maximum farmers are allowed to look elsewhere in agriculture reality, 1,060 McCormick tractors to collect from $360,000 to $250,000 and programs for cuts. Republican were registered by new owners, closing loopholes allowing some growers committee chairmen have suggested representing a 7% market share — to obtain millions of dollars. He also reductions in spending on land conser- not bad in only our third year,”says proposed to cut all farm payments by 5%. vation and nutrition programs,such as Vikky Morley, McCormick Tractors The argument surrounds the fact that food stamps, also run by the Agricul- International Ltd. bigger operations collect too big a share ture Dept. AG INDUSTRY WATCH is published monthly for the farm equip- U.S., Canada and Mexico print subscriptions are $349 per ment industry by Lessiter Publications Inc., P.O. Box 624, Brook- year. Save $50 by receiving Ag Industry Watch each month via field, WI 53008-0624. © 2005 by Lessiter Publications Inc. All E-mail Internet access at only $299 per year. International print rights reserved. Reproduction in any form of this newsletter content subscriptions are $449 per year. Send subscriptions to: Ag Industry is strictly forbidden without the prior written consent of the publisher. Watch, P.O. Box 624, Brookfield, WI 53008-0624. 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