UBS Channel Check: Ag Machinery Farmer Discussions - Input Costs the Key Concern
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UBS's channel check with US Corn Belt farmers finds caution about 2027 financial prospects, driven chiefly by the risk that fertilizer and other input costs rise more than 20% year-over-year. Farmers typically replace equipment based on machine age or technology upgrade needs, but spending appetite is currently suppressed by profitability concerns; some also report data overload, now handled by dedicated staff. UBS argues that hesitation among these swing-factor buyers could cap overall demand, and that consensus growth expectations for Deere, CNH and AGCO may offer limited upside. Other datapoints reinforce the cautious tone: Brazilian agricultural machinery shipments remain depressed, with August combine shipments down 34% year-over-year; the USDA's October WASDE report lowered corn price forecasts by 2%; and ACT Research trimmed its 2026-2028 Class 8 truck production forecasts. Looking ahead, UBS expects some pickup in equipment replacement demand in 2027, but constrained by the current farm income environment. AGCO, meanwhile, aims to lift PTx business revenue to USD 2 billion by 2029. The report offers no explicit stock ratings or target prices, focusing instead on industry growth expectations.
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