The US trade war with China continues to hurt the American heartland.
Tractor maker Deere, based in Moline, Illinois, reported earnings that missed forecasts Friday and lowered its outlook. Although the company reported a 5% jump in overall sales thanks to healthy demand for its construction and forestry equipment, Deere cited “persistent uncertainty in agricultural markets” as a problem.
“Ongoing concerns about export-market access, near-term demand for commodities such as soybeans, and a delayed planting season in much of North America are causing farmers to become much more cautious about making major purchases,” Deere CEO Samuel Allen said in a statement.
Deere (DE) stock fell nearly 8% Friday on the news. The stock is now down about 10% this year.
It’s no secret that the escalating trade tension between the US and China is bad news for Deere and US farmers.
JPMorgan analyst Ann Duignan lowered her outlook on Deere earlier this week to an “underweight” – essentially a sell. In a report, Duignan cited China tariffs on soybeans as well as an outbreak of African swine fever in China as two big problems.
She added that competition from Brazilian and Argentine soybean and corn farmers, a strong US dollar and bad weather in the Midwest are other factors that are problems for Deere.
Deere isn’t the only farm equipment company that’s hurting either. US construction equipment giant Caterpillar (CAT), which also makes tractors and other agricultural machinery, is one of the few Dow stocks that is trading lower in 2019.
And shares of Deere’s big European rival, Dutch-Anglo based CNH Industrial (CNHI), are in the red this year as well.