Replies to post #4980 on The Rising Influence of Rising Affluence

[DewDiligence]

DE had the highest quarterly sales and earnings in the company’s history, as the main Ag & Turf division had record sales and margins. Even more consequential for the 2012 outlook is the information on CC slides 8-9 (http://www.deere.com/en_US/docs/Corporate/investor_relations/pdf/financialdata/reports/2012/2012_secondquarter_confcallslides.pdf ), in which DE forecasts record US farm cash receipts in 2012 and increases in yield for the major US crops.

[DewDiligence]

DE has underperformed the S&P 500 lately. Normally, anything that increases US crop prices is bullish for DE, but the extreme drought in the Midwest is a different story insofar as it threatens the financial solvency of some growers. Here’s one of various reports:

http://www.bloomberg.com/news/2012-07-16/good-dirt-gone-dry-wilting-corn-crop-as-food-costs-rally.html

Randy Allen, the store manager at the Wright Implement, a distributor of Deere farm equipment in Crawfordsville, Indiana, said he’s already seeing a decrease in sales. A new planter can cost $300,000, while a combine fetches as much as $500,000 and a tractor is priced at about $200,000…