August 31, 2012
For agriculture machinery manufacturers like Deere and AGCO, the Midwest drought has taken a toll on their stock prices, which are both in the red for the year versus 10%-plus gain for the S&P 500. Yet the Department of Agriculture predicts farmers will make record profits this year despite the worst drought in a half-century. While many farmers are certainly hit hard, insurance and farm subsidies are making up for much of the lost revenue this year. Still, these record profits aren't quite translating to purchases of new equipment from these companies. That's because of uncertainty on the part of farmers who don't want to commit right now to new orders, and a saturated North American market after years of high crop prices and farm revenue. Check out the video below for more on how the drought affects these companies.
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