Deere & Co.’s second quarterly report for 2019 was yet one more indicator of the increasing economic struggle in U.S. agriculture. After the report was released on Friday (May 17), the company’s stock (DE) fell 4% to $140 in pre-market trading. Today’s (May 20) close was $135.37.
Deere forecasts a downturn for U.S. and Canadian agricultural equipment sales with the expectation that sales will be flat up to 5% for this year. Tractor and combines sales in South American industry sales are projected to be flat to up 5%, and Asian sales are anticipated to be flat to down slightly.
“Ongoing concerns about export market access, near-term demand for commodities such as soybeans, and a delayed planting season in much of North America are causing farmers to become much more cautious about making major purchases,” said Samuel R. Allen, chairman and chief executive officer.
The company’s lower forecast was wrapped up with a plan for tighter management of equipment inventory. In other words, combine and tractor production will be at lower levels through the rest of 2019.
Allen emphasized that Deere’s construction and forestry business are still doing well, they are even buying John Deere skid steer tracks to fix old equipment. According to last week’s report, construction and forestry sales were up for the quarter and year to date due to higher shipment volumes and price realization.
Deere’s quarterly summary included a shopping list of some 20-plus uncertainties for agriculture in the coming months. Top items were farmers’ confidence and financial condition, weather, exports and changes in farm programs and policies. Even swine fever made the list.
Access the company’s quarterly report here.
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