Deere & Company delivered stronger-than-expected fiscal Q3 2026 results, with net income rising 7% to $1.379 billion and worldwide net sales and revenues increasing 5% to $12.61 billion. The headline performance, however, masks sharply different trajectories across agricultural equipment. Production & Precision Agriculture remained under pressure, with sales falling 6% to $3.998 billion and operating profit declining 9% to $527 million, reflecting continued weakness in large agricultural equipment. Deere now expects FY2026 sales for the division to decline approximately 10%, while forecasting the U.S. and Canadian large-ag market down 15–20% and South American tractor and combine demand down by a similar magnitude.
The picture is considerably stronger in Small Agriculture & Turf, where quarterly sales increased 12% to $3.383 billion and operating profit jumped 28% to $622 million. Deere points to healthier livestock economics, particularly stronger beef and dairy fundamentals, as supportive factors for smaller agricultural equipment demand. This distinction is particularly important when interpreting Deere’s tractor exposure: the company’s Production & Precision Agriculture segment captures its large-production machinery business, while tractors from the 6 Series downward sit within Small Agriculture & Turf. The rebound therefore suggests that recovery is already appearing in lower-horsepower and livestock-oriented equipment even while the large-ag replacement cycle remains depressed.
Management nevertheless sees increasingly convincing evidence that the broader downturn is approaching its floor. Deere says 2026 is expected to mark the bottom of the agricultural equipment cycle, pointing to improving early-order activity, healthier used-equipment inventories and continued customer adoption of advanced technologies. The company also raised its FY2026 net-income outlook to $4.75–5.00 billion, although the quarter benefited from approximately $110 million of tariff recoveries.
Bottom Line: Deere’s Q3 results strengthen the emerging evidence that the agricultural machinery downturn is moving from synchronised contraction toward an uneven early recovery. The most important signal is not Deere’s 7% increase in corporate profit, which was also supported by Construction & Forestry and tariff recoveries, but the divergence inside agriculture itself: Small Ag is already expanding strongly while Production & Precision Ag remains negative. This suggests the next tractor upcycle may begin from the bottom of the horsepower ladder and spread upward only gradually as large-farm economics improve. Combined with the signals already emerging from AGCO, CNH and Kubota, Deere’s results make the case for a 2026 cyclical floor increasingly credible—but they also suggest that the next recovery will be segmented by horsepower, customer economics and geography rather than arriving as a single global rebound.
To dive deeper: https://www.deere.com/en-us/john-deere-news/fy26-q3-earnings
