John Deere posted a 17 percent jump in profits in the second quarter, topping analyst expectations and reinforcing a narrative of the strength of the American farm sector.
Analysts eagerly anticipated Deere’s second quarter results, claiming that the state of the company could reflect the state of the agricultural sector. While the farm sector as a whole is booming, with crop prices currently at all time highs and with farm incomes on the rise, rising fuel prices and the failure of Congress to pass a new farm bill have some farmers worried about the future.
While farmers may be apprehensive, farm equipment supplies appear to have nothing to worry about. Deere’s 17 percent profit jump translates into earnings of about $1.06 billion, or $2.61 per share, an increase of more than $100 million from last year. In addition to massive second quarter profits, Deere officials are expecting sales to increase this current quarter, rising 25 percent above Wall Street expectations.
Deere’s success reflects the current state of the ag industry. Crop prices, particularly corn prices, are at all time highs. High crop prices have led to increases in farm value and farm income, making agriculture one of the top producers in the overall American economy. In addition, while high Deere profits reflect the increasing purchasing power of farmers, it also reflects the upcoming record harvest planned by American farmers. The anticipated corn harvest will be the largest in American history according to U.S. Department of Agriculture predictions.
While the next few years may see an inevitable drop in crop prices and farm incomes, companies like Deere can certainly expect to continue reaping the benefits of a strong farm economy.
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Written by: Justin Ellison / Farm Plus Staff Writer