Shares of farm equipment makers drop on USDA report

Shares of large farm equipment makers fell on Wednesday.
Shares of large farm equipment makers fell on Wednesday.
Shares of the largest U.S. farm equipment manufacturers fell on Wednesday, after a report from the U.S. Department of Agriculture had forecasters expecting lower crop prices through next year.

Investors sold shares in the agriculture equipment market due to concerns that lower crop prices could hurt equipment sales, analysts said. The three largest equipment makers had posted stock gains of as much as 74 percent since March.

"These stocks had pretty big runs so there's some profit taking," said analyst Eli Lustgarten, according to the Associated Press.

A USDA report issued Tuesday projected a strong supply of commodities for the 2009-2010 crop year, which should cause some commodity prices to fall or stay flat.

That means farmers could have lower earnings and would be less likely to buy new equipment.

However, another analyst said in a note to investors that proposals to increase the level of ethanol blending for fuel could raise some prices next year.

The analyst said farm equipment sales should fare better than most other machinery sectors, the Associated Press reported.