Deere and Co (DE)

[DewDiligence]

Another write-up on DE’s amazing run:

https://finance.yahoo.com/news/deere-soars-ukraine-war-stokes-164402006.html

The sharp rally in the shares since the beginning of Russia’s invasion of Ukraine nearly a month ago has led to a 25% gain this year, making Deere the top gainer in the 72-member S&P 500 Industrials Index.

…Prices of crops such as wheat and soybeans have soared in recent weeks amid fear of looming disruption for crop supplies from Ukraine. …As a result, some estimate that Ukraine, which is a major exporter of wheat, corn and sunflower oil, may only plant about half a normal sunflower crop and a third less corn than last year. That reduced production will invariably cause prices to rise.

Rising grain prices, however, is typically good news for farmers and farm incomes. And that, in turn, is good for agriculture machinery makers like Deere and AGCO Corp.

…On the other hand, the gaps in the global crop supply created by the loss of the production capacity of Russia and Ukraine will also need to be filled. All together, it creates the perfect environment for a significant uptick in demand for farm equipment.