John Deere to Slow Production of Farm Equipment

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News at a glance

  • John Deere will reduce the production of some production facilities by up to 20% from the second half of 2019 due to commercial uncertainty and other stressors in the agricultural sector said Investor Relations Director Josh Jepsen on the company’s first-quarter earnings call. The production cuts will mainly refer to large equipment in the North American market.
  • “We’re not baking in trade resolution,” Jepsen said on the call. Production cuts might not be so needed if the only issues troubling John Deere’s customers were trade concerns — but they’re not.
    • Cory Reed, president of John Deere Financial, has cited lack of commercial resolution, rainy weather and African swine fever as a justification for a drop in production, so Deere “will end the year positioning for 2020.”
    • In addition to global trade conflicts, a pernicious disease, African swine fever, is eliminating enough pig populations in Asia to “significantly” affect the demand for animal feed, which pushes the balance even more against US grain producers.

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