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.