Wide shot of farmer walking through cut wheat field to tractor during summer harvest

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Baird report shows, growth in large agriculture tractor sales, while overall dealer inventories is seen stabilizing. USDA raised corn, lowered wheat selling price estimates as crop prices continue to support machinery demand.

Combined US and Canada large tractor sales increased 16.8%, compares to July +10.5%, June +10.4%, May +5.4%. Bifurcating: US sales up 12.4% following a 19.7% rise in July; Canada sales increased 50.8% off an easy comp after July was down 22.6%.

Segment wise dissecting: US sales of 4WD tractors was down 11.4%, row crop tractors up 11.5%, thus combines up 25.8%; whereas Canadian 4WD tractor sales were up 327%, row crop tractors up 43.9%, combined up 33.1%.

4WD Tractors: sales seen up 5.2% Y/Y vs. 22.8% in July. US dealer inventories were down 41% Y/Y in August.

Row crop Tractors: sales seen up 14.3% Y/Y vs. 15.5% in July. US inventories up 17.7% in July, fourth consecutive month of inventory growth and highest since March 2014.

Combines: sales up 27.3% Y/Y in August after 5.7% decrease in July. August L3M sales +13.4% Y/Y. US inventories up +0.9% in July. August is typically seen as a above average month for combine sales.

Mid-range tractor: sales drop 6.5% Y/Y in August vs. July -16.3% and June: -6.6%.

Stocks to tap include Deere & Company (DE) and Titan Machinery (TITN)

Digging contributor commentary on the stock: ‘Deere: Why I’m So Very Bullish Despite Challenges‘; ‘Titan Machinery: Adding At A Good Point In The Cycle

Image and article originally from seekingalpha.com. Read the original article here.

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