AGCO Corp. (NYSE: AGCO) reported Q2 EPS of $1.02, $0.10 better than the analyst estimate of $0.92. Revenue for the quarter came in at $2 billion versus the consensus estimate of $1.88 billion.

“After a brief weather-related run up in the second quarter, commodity prices have fallen below last year’s levels,” continued Mr. Richenhagen. “Crops in the United States have emerged early and are in excellent condition through July. The USDA is estimating grain inventories will grow during 2016, further pressuring commodity prices. Against this challenging backdrop, industry demand remains weak across all the major markets. Industry retail sales in North America declined in the first half of 2016, with a significant drop in the large producer segment. Sales of high-horsepower tractors, combines, sprayers and grain storage and handling equipment all declined significantly. Higher industry sales of small tractors, due to more normal conditions in the livestock sector and general economy, have provided a partial offset to the decline in large agricultural equipment. In Western Europe, first half industry sales declined more modestly. Margins for dairy producers remained weak and lower commodity prices kept market demand soft in the row crop segment. Industry sales declines were most pronounced in the United Kingdom and Germany. The declines were partially offset by growth in France stimulated by tax incentives for equipment purchases, which have been extended through the end of 2016. Reduced industry sales in South America were the result of lower demand in Brazil due to political and economic uncertainty that continues to impact farmer confidence. More supportive government policies in Argentina have contributed to higher sales in that market. Looking past the current operating environment, our long-term view remains optimistic, with expanding demand for grain supporting farm economics and healthy growth in our industry.”

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