Tractor sales were 2 per cent lower in February as buyers wait to see what the year holds, according to the Tractor & Machinery Association of Australia
Tractor sales in February just failed to meet last year’s level, falling short by 2 per cent compared to last February; with 2020’s year to date tractor sales now sitting 8.5 per cent below where they were this time in 2019.
While there was some (very welcome) widespread rainfall throughout February, it will take some time to translate to improved sales; and judging by the level of optimism being seen in the market, an overall improvement is hoped for.
Optimism can be fleeting, however, as at the time of writing the ASX has suffered its biggest one day fall since the global financial crisis and the longer term impact of the coronavirus pandemic remains unclear.
CORONAVIRUS – WILL IT IMPACT AG?
As the coronavirus continues to spread around the world, the outbreak is having a severe impact on China’s foodservice and on-trade channels.
The outcomes could become “more serious and longer-lasting” if the virus is not contained in the short term, according to agribusiness banking specialist Rabobank.
But the extent of the impact on Australia’s agricultural sector will be limited in the short-term and will depend on how quickly the virus is contained, Rabobank said in a recently-released report by its China-based research team.
In the report, titled ‘Recent Coronavirus Impacts on Chinese F&A’, Rabobank said “disruptions are being experienced across the entire food and agriculture (F&A) supply chain”.
“Given what we have seen on the ground, along with news received from major chains – for example, the closure of stores by Starbucks, Haidilao, McDonald’s, and Yum China – potential revenue losses for both retail and foodservice for the Chinese New Year week could range from 20 per cent to 80 per cent – a loss of between US$31 billion and US$124 billion across retail and food service,” the report says.
While the report said a quick and effective containment of the virus could lead to a rapid bounce-back, the longer the virus is uncontained beyond March, the more extensive, sustained and structural the impact will be on the F&A chain.
The story in February was a little more positive due mainly to the lift in sales in Victoria, which was up 13 per cent on the same month last year and is now 6 per cent ahead for the year so far.
Activity in the northern states remains subdued, with NSW down 6 per cent on last February and 16 per cent down year to date, while Queensland sales were down 11 per cent for the month and now 18 per cent behind last year.
The story in the west is somewhat downbeat with Western Australia 7 per cent down for the month, 4 per cent down YTD and South Australia down a further 6 per cent, now 13 per cent behind last year. Finally, the strong run in Tasmania continues, 6 per cent up for the month and now 22 per cent ahead for the first 2 months of the year.
Sales were once again strongest in the 100 to 200hp (75-150kw) category this February, up another 9 per cent. The 200hp (150kw) and above range was down 6 per cent for the month, the 40 to 100hp (30-75kw) range was also down 9 per cent and the under 40hp (30kw) range again struggled, down 5 per cent.
It’s this smaller “leisure” market that we expect to struggle a little over the coming months. Traditionally, this market has been sensitive to the general well being of the economy and with recessionary conditions imminent, demand could suffer
Conditions for combine harvester sales continue to be very challenging, with only a small number of sales completing again in February.
As previously stated, the forward orders position is not great so most business will be completed from existing stock, of which there appears to be plenty.
Baler sales have taken a bit of a dip again in February and are now down 36 per cent on last year, though expectations remain high for a very strong year once again.
And finally, sales of Out Front Mowers jumped in February but are still 10 per cent behind where they were the same time last year.