Deere Outlook Falls Short as Farm Rebound Remains Elusive

DE +2.24% CNH +1.78%

(Bloomberg) -- Deere & Co.’s first outlook for the year ahead fell short of expectations as uncertainly continues to surround the timing for a recovery in the US farm economy.

The world’s biggest farm machinery maker said net income in the fiscal year will be between $4 billion and $4.75 billion, below the average Bloomberg estimate for $5.31 billion.

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Shares fell by as much as 6.3% before the start of regular trading in New York.

The weak outlook for the maker of iconic green and yellow tractors comes as farmers have been hit hard by low crop prices and President Donald Trump’s tariff policies. Despite a recent deal between the US and China to boost shipments of American crops to Asia, there’s still questions on whether the sales will be enough to shake the US farm economy out of a years-long slump.

Rival manufacturer CNH Industrial NV earlier this month pointed to “ambiguity” on the terms of the trade deal, which leaves the sector with a lack of certainty on how it may benefit farmers in a way that would get them to spend more.

“Looking ahead, we believe 2026 will mark the bottom of the large ag cycle,” Chief Executive Officer John May said in a statement.

Deere estimated 2026 sales for its large agriculture segment — which caters to the biggest farmers of crops such as corn and soybeans — to be down 15% to 20% in the US and Canada. South America is seen flat for tractors and crop-cutting combines.

The company reported increased fourth-quarter sales due to both higher shipments and prices, but operating profit decreased due to elevated costs linked in part to tariffs. Deere in August said tariffs such as those on US imports of steel and aluminum cost the company $600 million.

Many in the industry believe China’s resumption of US crop imports as well as a forthcoming aid package for American farmers should be a help in 2026. The Asian country has purchased nearly 2 million tons of US soybeans since Oct. 30.

However, Chinese officials have yet to confirm details of a trade accord with the US. That has created further uncertainty for farmers as they plan out next year’s planting decisions and equipment orders.

(Updates with more details.)

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