According to a Nov. 8 report from Canadian ag lender Farm Credit Canada, Canadian combine inventories are forecast to remain tight into the end of 2024. The firm is forecasting combine inventories to remain under pressure, while 4WD tractor inventories are forecast to recover slowly over the next 2 years.
"We are anticipating inventory levels will remain tight through 2024 as producer demand remains strong for farm equipment and manufacturers catch up on pre-orders," the report said. "Inventory levels of new farm equipment have trended below the five-year average (tractors are down 42% and combines down 47%). Strong demand for farm equipment for the remainder of 2022 is expected to reduce inventory levels further and support higher prices.
"The good news is that equipment manufacturers are expected to adjust their production upward due to the changing economic environment as North American equipment dealers begin to rebuild their inventories. We expect farm equipment dealers to remain 100% sold on new equipment. However, individual dealer revenue remains uncertain and tied to deliveries and allocations from manufacturers. Overall, dealer sale revenue will come down to the number of trades that materialize once new equipment arrives."
The firm's formal forecasts are:
- Combine inventory projected to remain pressured into 2024
- 4WD tractor inventory levels are projected to recover slowly
- Inventory levels are recovering for smaller horse-powered units
Both domestically manufactured and imported equipment for the Canadian market are forecast to increase in price heading into 2023 due to inflation and a depreciating Canadian dollars. The report did note, however, that depreciation of the Canadian dollar affects equipment imported from the U.S. more and that "domestic manufactured equipment, including air drills and seeding equipment, tillage, grain carts, swathers and other “short-line” equipment prices, are less directly connected to the Canadian dollar." Farm Credit Canada is forecasting the Canadian dollar to average USD$0.72 through 2023.
The firm's equipment sales projections for Canada in 2023 are as follows:
- Under 40 horsepower tractor sales to decline 0.4%
- 40-100 horsepower tractor sales to rise 0.4%
- Over 100 horsepower tractor sales to rise 8.7%
- 4WD tractor sales to rise 13.9%
- Combine sales to rise 19.3%
- Canadian agricultural implement manufacturing to rise 32.2%