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RSSHow Ag is Holding Things Together at Deere
Coming off an exceptionally strong year for ag equipment sales in 2008, Deere & Co. executives are hoping that what farmers are doing right will help carry them through 2009.
While overall equipment sales in the second quarter of the year for the world's largest farm equipment manufacturer weren't very promising, ag continues to hold good prospects for at least a half-way decent year.
The company sees sales from construction equipment division fall more than 40% through 2009. At the same time, it sees industry sales of ag equipment in the U.S. and Canada to be only flat to down slightly.
"We continue to see strength in four-wheel drive tractors, combines, sprayers and planters," a Deere spokesperson said during a conference call with analyst. "Sales of tractors from row crops on down are expected to decline and the smaller the tractor, the larger the decline. Finally, sales of products commonly used by livestock, dairy, and cotton producers are weak."
Looking ahead to 2010, Deere sees the ag economy improving further with much of their outlook based on stronger farm cash receipts, solid farmer balance sheets and historically low farm debt. The charts generated by Deere below tell the story.
FIG. 1.
U.S. farm cash receipts are forecast to be down in 2009, but John Deere see and improving outlook for crop receipts, which are more closely tied to its business. "We introduced our 2010 forecast this quarter and, as you see, 2010 U.S. farm cash receipts are expected to increase about 4% from 2009 levels," said a Deere spokesperson.
FIG. 2.
Farm balance sheets continue to be one of the industry's strongest indicators as farm debt remains very low compared to farm equity.
FIG. 3.
Farm debt also remains at historic lows.
