Cream Of The Crop

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What's going on?

Deere & Co reported quite the fruitful quarterly harvest on Friday: the American agricultural equipment makers revenue and profit beat investors expectations.

What does this mean?

Sure, Deeres revenue was 11% lower than the same time last year and profit was down 10%, but those were smaller drops than investors were expecting. Maybe they hadnt accounted for the fact farmers still needed to replace old machinery, or that US government subsidies had encouraged them to buy more of what they needed. Or maybe theyd overlooked Chinas agreement to step up its purchases of US soybeans, which mightve given the countryfolk an incentive to spruce up their kit.


All that might explain why the equipment-maker raised its earnings forecast for the rest of its financial year. Thats only one more quarter, admittedly, but plenty of the worlds biggest companies have opted out of making any predictions what with the looming uncertainty of coronavirus. Then again, Deere did warn that a resurgence of the pandemic could make its prediction meaningless…

Why should I care?

For markets: Deere in spotlights.


Deeres stock initially rose 5% on Friday, likely because of its tidy update. Optimistic analysts were feeling good about the companys relative stability this year, and might be hoping the lockdown-driven gardening boom will keep demand for its products going strong. Not least because Deeres managed to offset falling sales by cutting costs something other industrial giants, like Caterpillar, have struggled to do as effectively.



The bigger picture: Emotional support animals.


Industrial companies like Deere and Caterpillar are economic bellwethers. That is to say, demand for Deeres products gives a good indication of how busy US farmers are keeping, while demand for Caterpillars machinery which is sold in the construction and mining sectors offers clues about global economic activity and growth (tweet this). And thats precisely why investors keep such close tabs on their updates.

Originally posted as part of the Finimize daily email.

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