Deere is showing some strength the last few days. I think it is the result, in part, of the $500 billion dollar federal farm aid bill.
I don't see how that is going to assist in increasing foreign demand for their products at this time. I think I read a few months ago that Deere was constructing a cotton stripper/picker plant in Australia. This on top of the Brazil plant construction. The problem is that there is more to their economy than a plant from Deere will satisfy.
Wall Street Week just indicated the new bullish forcasts in the markets here. the last two days of heavy increases and todays billion share plus trades on NYSE smack of more irrational exhuberance. I just can't buy into the happy days are here again philosophy that is spewing from every media outlet. It was just last week that Japan was on the verge of bancruptcy, the asian markets were sinking, Brazil was in dire straits, and the U.S. economy was in a downturn. Now, all of a sudden, 1/4% rate cut, farm bill and IMF infusions have turned everything around. Funny how it all works out, isn't it. Back to the topic; John Deere. As you may have heard, there is an over glut of corn this season; bumber crop. Farmers are sweeping out every available building to hold the grain until prices come back to respectible levels. There won't be any selling until that happens. In the mean time co's like DeKalb, Monsanto, DuPont, and Pioneer (hope I didn't miss anybody) are fighting over the rights to the Bt gene manipulation process to make corn insect resistant and selling their seed corn product to all who will buy. So I guess that means that another bumper crop of corn is in the works for next year. That is even if this years crop doesn't get sold. Then, of course, there is the U.P. railroad that is having a difficult time with logistics; moving the grain orders they have already. The whole thing is one big clusterphuque and like magic, it's all going to get better because of Willie Nelson, $500 billion farm bill (a heck of a lot of money) and a rate cut. Oh, well, now I'm beginning to get the picture. |
