Hope springs eternal, especially in the spring when farmers are anxious to get out and plant even when the commodity they're planting is priced below-cost. The latest numbers from the Association of Equipment Manufacturers released recently show March was a good month overall for tractor and combine sales. Not to throw water on the idea of a recovery, but digging into the stats offers some insight into what's going on.

Yes, overall tractor sales rose about 5.6% while combine sales pushed up more than 11%. These are interesting figures. Let's look at those tractor numbers.

When you use percentages to look at sales it's good to dig in. For AEM, the total tractor sales rise is highly bolstered by an increase in under-40 hp machines. That class of tractor saw a nearly 10% sales increase in March versus March 2016; and in year-to-date numbers sales of this class of tractors is up nearly 14%.

Much of that can be attributed to rising consumer spending as the market continues its strength and the economy keeps limping toward stronger health. When the bottom dropped out of under-40-hp tractor sales in 2008 it was because consumers simply stopped buying. It appears the large-acre homeowner; along with some ancillary markets like landscape construction (also tied to consumer attitudes) are healthy again.

In the 40 to under 100 hp class of tractors, there was a rise as well. Sales rose 1.6% in March versus March 2016, but year-to-date sales for the same period are still down 3.6%. This utility class of tractor, which can also be used for making hay, is getting a boost from a stronger livestock market – though some softness in the dairy industry may be holding down total sales for the near-term.

For two-wheel drive tractors over 100-hp (which includes tractors with mechanical front-wheel drive) sales were off nearly 15%, and down 13.5% for the year-to-date period January through March versus the same timeframe in 2016. This is what I call the "business" tractor class that ropes in a range of bigger-muscle machines; and the most likely to take longer to recover because of the continued commodity pricing slump.

There were two interesting figures in the March numbers. Combine sales and sale of four-wheel drive tractors.

For the four-wheel drive machines – which are tractors that can only be sold as four-wheel drive models – sales rose more than 20% in March; though they're still off nearly 13% for the January to March period. The challenge is that total sales figures here are smaller. AEM reported 229 four-wheel drive tractors were sold versus 190 in March 2016. A boost of 39 machines is a big deal in this market, and it appears that some farmers (it wouldn't take many) decided to buy this spring.

In combine sales, there was an 11% bump pushing sales to 300 machines in March, but sales are still off 16% for the January to March period when compared to 2016. Like the four-wheel drive market, numbers are lower here with an increase in 30 units sold accounting for the one-month rise.

Trends and inventories

When I view the AEM stats I like to see how the market is performing versus the five-year average. The good news is that overall the gross sales numbers are ahead of the average. Most of that can be attributed to that under-40 hp market. Yet it's still above the long-term trend and worth watching.

The other numbers to watch include the beginning inventory numbers for March. Right now, in the under-40 hp market manufacturers have about 6 months of inventory on hand. In that utility tractor 40 to 100 hp sector it's about 7 months. And in the over-100 hp sector, based on this report and March sales, there's just over 6 months of equipment on hand.

For higher-priced four-wheel drive tractors and combines, inventories are tighter. There's just over 3 months of inventory for large four-wheel drive machines. And for combines, manufacturers list less than 3 months of inventory on hand.

We've reported this before. When the machinery slump of the mid-1980s hit, manufacturers were slow to react having more than a year's worth of machinery on hand in some cases. These inventory figures continue to show manufacturers maintain their restraint.

On the whole, this report offers some good news in a soft machinery market. We'll keep watching for more signs of a bigger recovery. But we'll probably start with the commodity price charts first.