A Perfect Storm for Deere?

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Aug. 14 (Bloomberg) -- Deere & Co. forecast a decline in U.S. farm revenue, a key indicator of agricultural-equipment sales, through 2014 as crop prices weaken. Alix Steel reports on Bloomberg Television's "Bloomberg West." (Source: Bloomberg)

-- derail the profit?

Analysts say next year could be the perfect storm.

This chart shows future corn prices expected to fall next year.

Prices are ready at a three-year low.

The crop receipts, how much money farmers are making is pretty much as zero.

If history is any guide, income should follow corn prices.

Receipts will fall 4%. analysts say 10 percent.

What does that mean?

Farmers to not have as much money to buy $300,000 combine's. macquarie estimates for 33% decline in corn prices, sales watch -- corn sales could fall 5%. some analysts are calling it to be on the high side.

Under estimating what the potential is this year.

Larger crops mean lower prices.

We're talking about what this means overall.

How about specifically for de ere?

It is really construction and forestry getting hit as well.

That is the first time it is going to happen since 2009. there are some other factors that the company is struggling with.

First, and expiration of bonus depreciation.

Basically farmers have been able to adjust more for big-ticket items.

That expires at the end of the year.

What is the incentive to buy more equipment?

Second of all, it might cost more.

Farmers may not want to pay up.

Inventory is falling, but more slowly than support.

Reps have already been told there will be production cuts for combine's. this quarter implies a peak in sales.

That was something and analysts have been wary about 4 y 0.

This text has been automatically generated. It may not be 100% accurate.


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