What’s Going On Here?Deere posted better-than-expected earnings late last week, and ain’t y’all investors too kind, pushin’ the farm equipment-maker’s li’l ol’ share price higher. What Does This Mean?Deere’s worth paying attention to because it’s an economic bellwether, meaning demand for its products gives a good indication of how busy US farmers are keeping. So it’s a strong sign that the company’s profit surged 169% from the same time last year, and that it upped its expectations for the rest of 2021 for the second quarter in a row. That’s partly thanks to a recovering global economy in need of food production and construction equipment, and partly thanks to a surge in the prices of grains, which has given farmers more money to spend on new toys. Why Should I Care?For markets: All the demand, none of the supply.
Deere did warn that it might struggle to secure necessary parts in the months ahead, and it’s not alone: manufacturers across a host of different industries are running out of the steel, plastics, and rubber they need for their products, as the economy picks up again and demand overwhelms supply. Microchips too: Cisco’s shares dropped last week when it warned its profit might be lower than analysts were expecting, with the lack of semiconductors pushing up prices of what’s available.
The bigger picture: Deere ain’t foolin’ anyone.
Deere might masquerade as a folksy, salt-of-the-earth type, but it’s actually an uncanny hybrid of industrial and tech company – with one investment manager even including it in their autonomous technology and robotics ETF. That’s because the company’s investing big into “precision farming” technology – from crop-surveying drones to soil-analyzing artificial intelligence – that’ll allow farmers to grow more with less water, fertilizer, and land. That’s a market with big potential: Morgan Stanley reckons precision farming could rake in $17 billion of revenue in 2030 – up from $5 billion in 2019. | 
