Today, industrials editor and analyst Brendan Byrnes discusses how severe drought problems in the Midwest could hurt Deere (NYSE: DE ) . The U.S. Department of Agriculture already reduced its 2013 corn and soybean yield expectations, and those numbers could only get worse as the drought continues. Even though farmers might make more money on higher crop prices per bushel, they are less likely to purchase new farm equipment in the face of a poor crop output. And while emerging-market demand will offset this somewhat, the drought accelerated the saturation of the U.S. markets that reduce Deere’s domestic sales. Because of these lower yields and other factors, Brendan sees Caterpillar as a better stock in the manufacturing sector to own now.
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