Deere narrows profit outlook but sees farm equipment recovery by 2027

Deere & Co. raised the lower end of its annual profit forecast to $4.75 billion–$5 billion after third-quarter earnings beat analyst estimates, signaling cautious optimism about a rebound in the agricultural equipment market. The company now expects fiscal 2026 to mark the trough of the current farm machinery cycle, though it still anticipates steep sales declines in key regions. Deere’s updated outlook reflects improving order trends, stabilizing used-equipment inventories, and growing customer adoption of advanced technologies, despite persistent weakness in farmer spending driven by low crop prices and high input costs. CEO John May stated, ‘Across our business, early order program trends, improving used-equipment inventories and increasing customer adoption of our advanced technologies give us confidence that Deere is well positioned for long-term value creation.’ The company’s third-quarter net income topped expectations, but shares traded relatively flat in premarket activity after paring an earlier gain of up to 4.9%. Deere now projects sales in the U.S. and Canada to drop 15%–20% for the year, a steeper decline than previously forecast. Sales in South America are also expected to fall 15%–20%, while flat sales in Europe align with the low end of prior estimates. Within its core production and precision agriculture segment, Deere forecasts a 10% decline in net sales for the fiscal year, following a 6% drop in the third quarter. The company recovered $382 million in tariff impacts over nine months, though analysts note the outlook still implies a lack of near-term recovery. Rival CNH Industrial NV recently raised its annual forecast, citing expectations of a 2027 rebound as aging equipment prompts upgrades, while AGCO Corp. trimmed its estimates. Grain prices, including wheat, have risen to multi-year highs due to heat waves, drought, and geopolitical tensions in the Black Sea region, which could improve farmers’ purchasing power if sustained. However, U.S. tractor sales through July were down 13% year-over-year, according to the Association of Equipment Manufacturers, and Purdue University’s monthly farmer sentiment index showed only modest improvement in July. Farmers continue to delay purchases amid unstable production costs and crop prices, prolonging the industry’s downturn.