The Rising Influence of Rising Affluence

[DewDiligence]

(DE)—USDA says 2013 US corn acreage will be largest since 1930s:

http://www.bloomberg.com/news/2013-02-21/corn-drop-seen-as-u-s-sows-most-since-1936-commodities.html

This is the paradoxical reason the shares of DE have underperformed the market in the past week or two, despite the USDA’s separate forecast of record-high US farm income in 2013.

The paradox is that, according to DE, US farm income in a given growing season is the single best predictor of DE’s equipment sales in the following season, so the UDSA farm-income forecast for 2013 ought to be highly bullish for DE’s sales in the 2014 growing season in the Northern Hemisphere. However, investors have assumed that the huge US corn harvest in 2013 will cause corn prices to plummet to such a degree that growers will have less money to spend on new equipment. It makes little sense, IMO, but that’s the market!