Farm equipment dealers are beginning to report the first signs of market stabilization after an extended period of weakness, according to commentary published Thursday by analysts at Raymond James. Dealers characterize current activity as remaining at low levels, but with a growing, cautious optimism that a slow recovery could take hold in late 2026 and extend into 2027.
Despite these early signals of steadiness, Raymond James cautions that the near-term agricultural outlook is increasingly opaque. A number of factors are continuing to inject volatility into grain and oilseed prices, complicating growers' planning and margins. The analyst note highlights several external drivers - a postponed U.S.-China summit, the conflict in Iran, unsettled U.S. biofuel policy decisions, and rising energy-driven input costs - as sources of ongoing uncertainty.
Raymond James' Washington policy team interprets the postponement of the planned summit between President Trump and President Xi by five to six weeks as an indication that the Iran conflict is likely to persist at least through mid-April. That continued geopolitical stress has contributed to disruptions in shipping and to higher oil prices, which in turn have pushed fertilizer and fuel costs upward.
Fertilizer prices have moved notably higher in recent weeks, driven by the oil price response and interruptions to shipments through the Strait of Hormuz. Raymond James reports that average retail prices for UAN28 and urea are each nearly 13% above February levels, and that all eight major fertilizer products tracked by the firm have seen price increases.
How much individual farmers feel the impact depends in part on their purchasing strategies. Many growers who pre-purchased fertilizer are relatively protected for the current season; others delayed purchases pending bridge payments. The USDA has disbursed $7.7 billion of the planned $11 billion in Farm Business Assistance payments to date, a flow of funds that some farmers were awaiting before committing to input purchases.
Fuel costs have also added pressure to farm economics. Nationally, diesel prices recently exceeded $5 per gallon. Raymond James illustrates the variability in farmer outcomes with the example of an Iowa operator running roughly 2,000 acres who consumes about 21,000 gallons of diesel per year. That farmer booked a year's supply in December, but fuel costs have risen roughly $1.25 per gallon since then, underscoring how profitability swings based on timing and hedging of purchases. The firm suspects that most large professional farmers and likely new-equipment buyers are well protected for this growing season due to their purchasing and hedging approaches.
On the equipment side, used-equipment inventories are generally in healthy condition, especially in the 5-15-year-old machine cohort. Dealers say late-model, high-dollar machines remain a more difficult class to manage, however. In reaction, many dealers have shifted to more aggressive sales tactics - they are more willing to quote new equipment prices and to take trades. That contrasts with a prior posture where dealers would discourage new purchases to avoid accumulating expensive late-model used machines in inventory.
Dealers also report fewer promotions and less discounting from mainline original equipment manufacturers. Contacts at CNH Industrial noted extended lead times on high-horsepower units as that company tightens production to better match retail demand and expands its pre-sell programs. Raymond James says multiple CNH product categories are effectively sold out through the fourth quarter of 2026.
Management at CNH and AGCO Corporation has identified North America as the region with the strongest relative underlying pricing power. Raymond James projects that this dynamic will contribute positively to Deere & Company fiscal 2026 guidance, estimating roughly 1.5 percentage points of upside from price realization.
Feedback from dealers suggests an improving backdrop specifically for Deere's production and precision agriculture business in the back half of the company’s fiscal year, with demand concentrated in large tractors. Availability for Deere's 7-9K series tractors currently stretches to September, and Deere has increased daily production schedules for its 8K series tractor line by 30%.
Deere unveiled new tractor models at Commodity Classic and announced pricing for a high-horsepower 8R tractor that will enter production at the start of the company's new fiscal year. Dealer reports indicate that production slots for that model are already booked through February and March, signaling persistent demand at the high end of the market.
Key takeaways:
- Dealers report low-level stabilization with cautious optimism for a gradual recovery in late 2026 into 2027.
- Fertilizer and fuel price increases, compounded by geopolitical and policy uncertainty, are creating near-term volatility in farm economics and commodity prices.
- OEMs and dealers are seeing stronger pricing power in North America, with supply tightness and pre-sell programs supporting order books into 2026.
Risks and uncertainties:
- Geopolitical conflict in Iran and related shipping disruptions through the Strait of Hormuz could further lift oil and fertilizer costs, pressuring farmer margins and input affordability.
- Uncertainty around U.S. biofuel policy decisions may continue to contribute to commodity price volatility, affecting planting and input decisions.
- Variability in hedging and purchasing behavior across farms means some operators remain exposed to recent fuel and fertilizer price spikes.