Farm Equipment Prices Have Nowhere to Go But Up, AgDirect Warns

Point-of-sale equipment financing collapsed 20% in 2025, and Greg Roberg, vice president of sales at AgDirect, reads that number as a warning rather than a bargain signal: the machinery a farmer wants today may cost more, and finance at a higher rate, next year.

The core of his argument sits with the Federal Reserve. September delivered the year's first interest rate hike, and although the Fed held rates at its October meeting, Roberg expects another increase before Christmas. "I don't see rates getting any better. There's a better chance they'll go up," he said. "Right now, the futures market appears to be leaning toward another Fed rate increase before the end of the year."

What is driving the cost pressure?

No single factor explains the inflation. Skyrocketing diesel prices have accelerated the trend, but Roberg lists a wider set of causes: geopolitical tensions, war, tariffs, increased AI infrastructure spending and rampant government spending. Together they have pushed long-term yields to multi-decade highs.

The geopolitical picture keeps tightening. "We have the Russia-Ukraine war, which has rattled the energy markets, then the war with Iran and the on-again-off-again Strait of Hormuz closure," Roberg said. "High oil prices have created additional stress on producers."

Consumers feel the same squeeze, he noted. "All of us are seeing higher prices at the gas pump, and anything that has petroleum products is likely higher than it was six months ago, certainly a year ago. Inflation has crept back up; it was heading down."

How weak is demand at the dealer yard?

The sales data quantifies the slump. According to the Association of Equipment Manufacturers, US sales of agricultural tractors fell 16.4% in September against the same month last year, while combine sales dropped 10.9%. The 2025 financing decline of 20% points to a similar trajectory this year, because the underlying stressors have not eased.

That weakness has forced manufacturers to cut production to match reduced demand. The consequence for buyers is shrinking lots: newer on-lot machinery inventory is dwindling, and late-model units are becoming harder to source. Roberg recommends buying while the assortment lasts.

"Dealers have a very good assortment of late-model equipment," he said. "The best advice I can give producers is: Find what you're looking for, talk to your tax accountant, and make a really well-informed decision. Producers that need equipment should be looking at what is available now that might fit their operation and their budget."

Are auction values already turning?

Farmers appear to be listening. Roberg said farm machinery sales are picking up, and he credits rising commodity prices, which have stabilized over the last several months, for most of the recovery.

Sandhills Global market data backs that reading. Its latest report documents rising auction prices as competition heats up: values for used tractors rated at 100 hp or more are up nearly 5% over this time last year.

Ryan Dolezal, manager of TractorHouse, put the trend in perspective. "The farm equipment auction market has seen a jump in activity," he said. "We view this as moderate progress in the right direction, tempered by increases in fuel prices and other variables, but dealers are becoming more optimistic for the end of the year and into 2027."

Why commodity prices beat interest rates

Profitability, not financing costs, drives the purchase decision, Roberg argued. Farmers buy when they can. "Cash flow seems to be the biggest driver," he said. "When the price of corn and soybeans and some other commodity prices are profitable, that drives sales as much as anything — even more than interest rates."

That logic frames the current pause in rate hikes as a window rather than a plateau. A farmer holding cash faces a choice between today's fixed-rate deal and tomorrow's likely higher rate on a thinner inventory of machines, at auction values that have already climbed 5% for 100 hp-plus tractors.

Roberg's guidance is direct: shop now, because it might be the right time to pull the trigger. Farmers weighing a machinery decision before the Fed's next move should watch the December rate decision, dealer lot levels through the winter, and whether the Sandhills auction index keeps climbing into 2027.