John Deere Calls “Large Ag Cycle” Bottom Next Year – Just As China Ramps Up U.S. Soybean Buying

Economic conditions for American farmers have been brutal this year, as China shifted much of its soybean and other commodity purchases to South America. But the new Trump-Xi trade deal has sparked hope, with Beijing ramping up U.S. crop purchases once again. If sustained, this could signal that the worst of the farm-sector downturn is finally behind us.

American farmers finally received some clarity from equipment-maker John Deere, which said Wednesday morning in an earnings update that the bottom of the large agricultural cycle may materialize in 2026. 

“Looking ahead, we believe 2026 will mark the bottom of the large ag cycle,” John May, chairman and CEO of John Deere, wrote in a statement. 

Deere’s fiscal fourth-quarter outlook for 2026 highlights just how fragile the U.S. farm economy remains. It estimated fiscal-year net income between $4 and $4.75 billion, well below the $5.31 billion Bloomberg Consensus, sending shares down about 2% in premarket trading in New York. Deere shares are up 17% on the year, as of Tuesday’s closing. 

Here’s a snapshot of Deere’s mixed quarter, beating estimates on several key lines while showing continued margin pressure across major segments (courtsey of Bloomberg): 

Headline Results

• EPS: $3.93 (vs. $4.55 y/y), topping the $3.88 estimate
• Net income: $1.07B, down 14% y/y but slightly above expectations
• Total net sales & revenue: $12.39B, up 11% y/y

Production & Precision

• Ag: Sales: $4.74B, up 10% y/y and ahead of estimates
• Operating profit: $604M, down 8% y/y
• Margin compression continues (12.7% vs. 15.3% y/y)

Small Ag & Turf:

• Sales: $2.46B, up 6.5% y/y and stronger than expected
• Operating profit collapsed to $25M (-89% y/y)
• Margin plunged to 1% (vs. 10.1% y/y)

Construction & Forestry:

• Sales: $3.38B, up a strong 27% y/y
• Operating profit: $348M, up 6% y/y
• Margins slipped to 10.3% from 12.3% y/y

Deere’s call that the agricultural cycle will bottom next year comes as the Trump-Xi trade agreement aims to boost U.S. crop shipments. Rising export demand should help improve farmer sentiment and incomes, laying the groundwork for a more meaningful farm-sector recovery.

The latest word from Reuters is that China has purchased at least 10 cargoes of U.S. soybeans worth around $300 million in contracts signed on Tuesday. The purchases were confirmed by two traders with direct knowledge of the deals. This comes just two days after Trump and Xi spoke by phone, during which Trump touted a “great deal for U.S. farmers.”