Shares of Deere & Co. tumbled the most in over three years as the world’s biggest farm machinery maker pared its annual earnings outlook with lower grain prices curbing growers’ spending.
The farm-machinery sector has been expected to bottom out this year, but a bigger-than-expected American corn harvest and lagging demand for crops like soybeans amid President Donald Trump’s trade wars may be shifting that timeline. Sentiment among grain and livestock producers eased earlier this month as crop prices declined.
“We currently have more uncertainty than ever in the North American ag market, which translates to the broadest range of outcomes for a following year than we’ve had in a long time,” Cory Reed, president of worldwide agriculture and turf division for production and precision, said Thursday on a call with investors.
Shares fell as much as 8.4% in New York, the biggest intraday drop since May 2022. The stock had risen more than 20% this year through Wednesday, reaching an all-time high in May.
Deere said tariffs such as those on steel and aluminum ate into profits in segments for small agriculture and turf, as well as construction and forestry. The company estimated tariff costs for the fiscal year at $600 million, up from a previous estimate of $500 million.
It also said prices for some model 2026 machines will go up by 2% to 4% even as Deere looks to minimize cost increases. Rivals CNH Industrial NV and AGCO Corp. recently warned that levies will raise prices for machinery.
Crop prices are hovering near multi-year lows, but favorable US biofuel legislation and trade deals with countries such as Japan could give a lift to farmers soon. Many growers in Deere’s top market of North America wait until the final months of the year to make a decision on purchasing a new machine.
Farmers are “waiting and seeing, and we think there’s positive tailwinds from what we see in the trade deals,” Reed said. “It’s a question of when does that relate to the demand that we see.”
The builder of the iconic green and yellow machines used to plant and harvest crops estimated 2025 net income between $4.75 billion and $5.25 billion, Deere said in a statement. That’s down from a forecast three months ago for between $4.75 billion and $5.50 billion.
“Tariff uncertainty and deflated commodity prices have made farmers increasingly cautious in spending decisions and more hesitant to accept higher machinery prices,” CFRA Research equity analyst Jonathan Sakraida said in a note.
Deere and other equipment makers have been reducing output as part of efforts to bring down dealer inventory. Companies are also offering new technology that’s helping farmers autonomously work fields.
“By proactively managing inventory, we’ve matched production to retail demand, enabling our company and dealers to respond swiftly to market shifts and customer needs,” Deere Chief Executive Officer John May said in the statement.
Deere’s worldwide net sales fell 18% through the first three quarters. In the key North American market, the company expects sales for the entire fiscal 2025 to be down 30% for its biggest segment of production and precision agriculture.
Written by: Michael Hirtzer @Bloomberg
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