John Deere says it will slow production output at certain facilities by as much as 20 percent year-over-year during the second half of 2019. Reasons for the decision range from trade uncertainty to a host of other issues pressuring the Ag industry.
Director of Investor Relations Josh Jepsen says output reductions will mainly focus on large equipment in the North American market. Cory Reed, President of John Deere Financial, points to a lack of trade dispute resolution, as well as wet weather conditions and African Swine Fever as reasons to lower production. Reed wants the company to position itself well for 2020 by the end of this year.
Higher freight costs, including some air freight charges to bring in parts, as well as unfavorable product mix and overall uncertainty, along with upcoming decreased production volume, are all causing manufacturers to drop their margin projections in the industry by one percent this year.
The Ag Economy Barometer plummeted in April, declining to a reading of 115, an 18-point decline compared to March when the index stood at 133.
The 18-point decline in the index was the fourth largest one-month fall in the barometer since data collection began in October 2015. Organizers say the barometer’s decline was driven by worsening perceptions of both current economic conditions and weaker expectations for the future.
Producers surveyed were less inclined to think now is a good time to invest in buildings and equipment, and are less optimistic that the trade dispute with China will be resolved by July first than they were a month earlier. Over half, 56 percent, of farmers in the April survey reported they expect their farms’ financial performance to be about the same as last year.
However, 27 percent of farmers said they expect this year’s financial performance to be worse than last year. Finally, producers appear to have a more negative perspective on the future direction of corn and soybean futures, helping to explain some of the decline in the barometer.