Wells Fargo Says July WASDE Report Strong for Ag Equipment Cos. (DE) (AGCO)
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Price: $88.04 +1.23%
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Up: 21 | Down: 43 | New: 13
Rating Summary:
8 Buy, 7 Hold, 3 Sell
Rating Trend:
Down
Today's Overall Ratings:
Up: 21 | Down: 43 | New: 13
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Wells Fargo's Andrew Casey said data out of World Agricultural Supply and Demand Estimates for the month of July should be "modestly positive" for Ag Equipment stocks like Deere (NYSE: DE) and AGCO (Nasdaq: ACGO).
Casey noted this latest report was "the first WASDE since crop conditions began their precipitous deterioration, and the changes in estimates appear moderately bullish." He pointed to a rise in farmer's cash flow expectations, attributable to a wider rise in crop price estimates compared to the decrease in crop yield forecasts.
The analyst liked the change in the USDA's corn yield estimates (from 166 bushels/acre to 145 bushels/acre) given a 28 percent increase at the midpoint of average farm selling prices. "The July WASDE data implies a 2% yr/yr increase in U.S. row crop farm cash receipts (basket of corn, soybeans and wheat) vs. the June reports implied 9% yr/yr decline. Compared to the June report, global and U.S. stocks to use were decreased for corn, soybeans, and wheat. U.S. corn ending stocks to use are now expected to be 9.3% vs. June’s expectation of 13.7% and the prior year’s 7.2%," according to Casey.
Casey finally noted increases in the USDA's raised average farm price forecast: "corn now at $5.40-6.40, soybeans at $13-14 and wheat at $6.20-7.40."
Shares of Deere are down 0.4 percent at last check, while shares of AGCO are up 0.5 percent.
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Casey noted this latest report was "the first WASDE since crop conditions began their precipitous deterioration, and the changes in estimates appear moderately bullish." He pointed to a rise in farmer's cash flow expectations, attributable to a wider rise in crop price estimates compared to the decrease in crop yield forecasts.
The analyst liked the change in the USDA's corn yield estimates (from 166 bushels/acre to 145 bushels/acre) given a 28 percent increase at the midpoint of average farm selling prices. "The July WASDE data implies a 2% yr/yr increase in U.S. row crop farm cash receipts (basket of corn, soybeans and wheat) vs. the June reports implied 9% yr/yr decline. Compared to the June report, global and U.S. stocks to use were decreased for corn, soybeans, and wheat. U.S. corn ending stocks to use are now expected to be 9.3% vs. June’s expectation of 13.7% and the prior year’s 7.2%," according to Casey.
Casey finally noted increases in the USDA's raised average farm price forecast: "corn now at $5.40-6.40, soybeans at $13-14 and wheat at $6.20-7.40."
Shares of Deere are down 0.4 percent at last check, while shares of AGCO are up 0.5 percent.
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