Drought finally slows tractor sales

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Sales of agricultural equipment dipped in August, a sign that the effects of the drought in the eastern states are beginning to sink in

Sales of agricultural equipment dipped in August 2018
Photo: Bloomberg|Bloomberg|Getty Images

Tractors for sale

Tractor sales, particularly in NSW, were greatly impacted, down 25 per cent on last month and are now 3 per cent behind on a year to date basis.

The picture in Victoria was not much better, down 4 per cent for the month and now in line with last year.

In Queensland, the "damage" was contained somewhat, only 1 per cent behind last month and now 2 per cent behind year to date.

The picture elsewhere in the country is starkly different.

Sales in Western Australia were again strong, up 10 per cent on last month and remaining 10 per cent ahead year to date. Business is booming in South Australia, up 14 per cent for the month and now up 11 per cent for the year.

Finally, the NT sales were up 60 per cent for the month, while Tasmania was also up, this month a further 5 per cent.

Taking a look at the four reporting categories for tractors, we can see that the small under-40hp size ranges slowed noticeably, 17.5 per cent behind last month and now 5 per cent behind year to date.

The picture is similar for the 40-100hp range, down another 8 per cent, but marginally higher year to date.

The large end of the scale above 200hp is suffering, down 8 per cent for the month and now 9 per cent behind year to date.

The only bright spot appears to be in the 100-200hp range, up 4 per cent for the month and sitting 9 per cent ahead for the year. Indeed, it is this size range that appears to be doing the "heavy lifting" when it comes to the tractor market.

The commonly held view appears to be that we may have reached a bit of a saturation point when it comes to the large end of the range and the smaller tractors, long dominated by the leisure market, may also be experiencing a pause after running hot for so long.

Sales of combine harvesters have not yet been reported in any great numbers as the window for deliveries begins this month.

Most dealers are playing their cards close to their chest in terms of the success or otherwise this season. The west is buoyant but there is a fair degree of pessimism in the eastern states.

The full picture will unfold in the coming weeks.

Baler sales remain subdued, down another 4 per cent in August and now 16 per cent on last year. Once again we are seeing a dampening of demand here in response to the broader market.

Finally, sales of out-front mowers are down a further 16 per cent this month, now 6 per cent behind for the year.

Not surprisingly, the industry’s run of good fortune appears to be slowing for the first time in five years.

Drought combined with a bag of economic forces including exchange rate, interest rates and improving overseas demand are all set to have an impact.

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