Deere earnings reassure investors
Deere & Co.’s revenue was 11% lower than the same time last year and profit was down 10%, but that performance still beat analysts’ expectations and caused the company’s stock price to rise.
“While the coronavirus-induced uncertainty and the U.S.-China trade dispute have lowered commodity prices, U.S. President Donald Trump’s $19 billion farm relief program and the need to replace aging tractors and combines have underpinned farm equipment demand, particularly for small tractors,” Reuters said in an analysis.
“Deere said the lingering economic uncertainty is also driving farmers to invest in technology to reduce their costs and enhance productivity. Sales of the company’s planters and sprayers under the early order program were higher this year from a year ago,” Reuters noted.
Finimize, a website aimed at millennials, noted that analysts look at Deere and Caterpillar as bellwethers of the economy.
“That is to say, demand for Deere’s products gives a good indication of how busy U.S. farmers are keeping, while demand for Caterpillar’s machinery – which is sold in the construction and mining sectors – offers clues about global economic activity and growth,” Finimize said.
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Agriculture Secretary Tom Vilsack said that work on climate-smart agricultural policies should take place in the next two years so that Congress has experiences from which to learn before writing the 2023 farm bill.