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John Deere shares fell over 5% on Thursday despite delivering a second-quarter earnings report that exceeded Wall Street expectations – a reflection of uncertainty about a farming cycle the agricultural equipment giant contends is bottoming out.
Deere reported fiscal second-quarter earnings per share of $6.55 on on equipment sales of $11.8 billion. Wall Street analysts were looking for profit of $5.70 a share on sales of $10.3 billion, according to Bloomberg. In the same quarter last year, Deere saw earnings per share of $6.64 on sales of $11.2 billion. Deere also stuck with its outlook for total fiscal 2026 net income of $4.5 billion to $5 billion.
Investors didn’t appear to like a 14% year over year fall in sales of large agricultural equipment, while the squeeze on input as rising fertilizer and fuel prices offset the upside of a boost in corn, soybean and wheat prices, Barron’s noted. The market had been feeling better about the farm economy outlook before the war, with Deere stock jumping 12% after better-than-expected first-quarter earnings in February that were accompanied by a boost in profit guidance from management. Deere stock has fallen by 11% since the start of the Iran war.
For its part, Deere management maintains that the worst will soon be behind the farm economy.
- “In the near term, a lot has transpired over the past quarter in the global economy, most notably, the conflict in Iran and the associated impacts. However, our baseline view remains that 2026 will represent the bottom of the ag cycle,” said Chief Financial Officer Brent Norwood in a conference call with analysts after the earnings release.
White House beef: News reports are highlighting the behind-the-scenes jockeying and internal divisions that accompanied last week’s White House decision to reportedly hold off on what had been widely discussed plans to issue an executive order temporarily reducing import tariffs on beef.
Politico, citing four people it described as familiar with the talks, said a split over the plan highlights a dilemma facing President Donald Trump as walks a tightrope trying to balance consumer worries about rising grocery prices with his supporters in the cattle industry. April consumer price index data released last week showed beef prices had risen more than 14% year over year. The report said an unnamed senior White House official described the executive order as still a “work in progress.”
Politico said top White House officials including National Economic Council Director Kevin Hassett and deputy chief of staff Stephen Miller have pushed for executive action that would lower beef prices without having a significant impact on ranchers. USDA Secretary Brooke Rollins, meanwhile, remains opposed to any plan that would boost imports and anger ranchers. Politico said a White House official close to the conversations said last week’s executive order was delayed after Rollins “at the last minute went into the Oval and threw a fit. A USDA spokesperson told Politico that the department wouldn’t comment on private meetings between Trump and Rollins but added that “anybody who is remotely familiar with Secretary Rollins knows she doesn’t throw fits.”
An El Nino deep dive: If the National Weather Service’s Climate Prediction Center forecast that the El Nino weather phenomenon will form as early as next month is correct, U.S. farmers in the drought-stricken Southern Plains may get some relief later this year. The weather pattern shouldn’t adversely affect the Corn Belt this summer but could make for tougher conditions in South America and elsewhere. With 60% of the U.S. in some stage of drought, the appearance of El Nino and the potential for more rain could be an “overall positive” for U.S. farmers, says Brad Rippey, meteorologist for the U.S. Department of Agriculture. Check out a special report on the potential for a “Super El Nino” and what it means for global ag markets right here.
‘Robust’ E15 discussions: Senate Majority Leader John Thune said he and his colleagues are working to pass House-approved year-round E15 legislation and a new farm bill, both of which face a 60-vote threshold in the Senate, American Ag Network reported. House Republicans separated year-round E15 from the farm bill in order to help it win House passage, but that created additional hurdles in the Senate. Thune said lawmakers are working out a strategy to advance the legislation despite the higher vote threshold for standalone bills.
- “We’re having a robust discussion about it.” Thune said, according to the report. “I’m hopeful and confident that, in the end, we’ll be able to succeed and pick up what the House did, figure out how to pair it with the farm bill that they sent over here, and try and get a result for the American people and, more specifically, for the farmers all across this country.”
Australia preps biofuel mandates: A government spokesperson said Australia plans to introduce biofuel blending mandates to boost local production and increase its energy security, Reuters reported. The official added that developing the policy was a priority after the Iran war imperilled fuel imports.
Australia is a major producer of canola seed and tallow that are used to make biofuel but currently exports these products and imports the vast majority of its fuel, the report noted.
Australia would be the latest in a string of countries that have adopted biofuel mandates in the wake of the Iran war, which has choked off crude shipments through the Strait of Hormuz and sent crude and fuel prices soaring. The report noted that rising gasoline, diesel and jet fuel prices and the threat of supply shortages dominated newspaper front pages in Australia after the war began.