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Rise in value of two most significant U.S. cash crops strengthens John Deere operations

Friday, April 22, 2011

Corn futures are up.
Corn futures are up.

Corn and soybean futures have risen dramatically in recent months. The crops have doubled in price in the last year, and July 2011 delivery contracts rose by 3.5 percent this week, as a result of precipitation in the Midwest in the near future, reported Bloomberg. These developments mean farmers' products are priced higher and they can re-invest in agricultural equipment from providers like John Deere.

For the most part, high soft commodities prices are encouraging farmers worldwide to purchase more harvesting equipment like tractors, windrowers, and combine harvesters. This has kept Illinois-based Deere and Company going strong despite the incremental economic growth in the U.S. Samuel R. Allen, Deere's chief executive officer, told the Wall Street Journal that a rise in global demand for edible and fuel-producing crops would spur John Deere agricultural equipment sales for a few years to come.

Production plans for untilled swaths of land in emerging markets like Russian and China will continue even in the wake of the higher crop prices, observed Allen. Deere is also branching out to India and China to supply individuals with smaller-scale machinery. Allen, in his comments to the news source, implied that Deere is making an effort to think globally, thus explaining this investment.

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