ETF Trends
ETF Trends

Quarterly earnings Wednesday from Deere (NYSE: DE) were set to influence exchange traded funds that invest in agribusiness and industrial stocks.

ETFs such as the $4 billion Market Vectors Agribusiness (NYSEArca: MOO), which holds 8% in Deere, could see weakness after the quarterly report. Deere shares slipped about 1% before the bell Wednesday.

Likewise, the $4 billion SPDR Industrial Select Sector Fund (NYSEArca: XLI) holds 2.9% in Deere. [Small-Cap Ag ETF Leverages Food Prices, Population.]

The plentiful run-up in global farm conditions has added to Deere’s success, as well as implementing successful business plans for innovative equipment lines. Lynn Ashton for Daily News Press reports that Deere’s full-year earnings forecast has been raised considerably and now stands at about $2.5 billion. [Agriculture ETFs Harvest Gains.]

“The long-term conditions driving demand for Deere’s tractors, combines and excavators are still intact,” says Samuel Allen , CEO at Moline, Illinois-based Deere. “Global food output must double by 2050 as the populations in emerging economies expand, become more prosperous and increasingly migrate from rural areas to cities,” he said.

“Deere is positioning itself to help farmers to meet their needs by improving productivity, because simply cultivating more arable land won’t be enough,” Allen said.

Factors supporting a run-up in Deere shares, from Jefferies Equity research America, include:

  • Crop prices remain high with margins higher than expected, due to strong pricing and productivity. Crop prices may remain elevated relative to historical averages.
  • A pick-up in construction sales and non-agricultural farming re-accelerates.

Tisha Guerrero contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.