Deere Cuts Annual Profit Outlook as Farmer Demand Slows

I feel like we saw this from some of their rivals as well. So is this a deer problem or is this really an industry problem? You're right. I mean, it's an industry problem. We expect a deer to cut their outlook. Just because you know their their primary competitors in the USC and H and Echo also lowered their outlook this quarter, but this was more of a haircut than we anticipated. They lowered their net income guidance about 8% to about $7 billion this year, which would imply earnings are going to be somewhere north of $25 a share in 2024 or about 8% below the Street. And really the the reductions been driven by 1 deteriorating global AG markets and two, a need to manage rising inventory levels as that demand starts to pull back. So you're going to see Deer meaningfully under produced demand here in the back half of the year. I think the question now becomes, is this enough of a cut to destock the channel? Well that's kind of what I'm curious about. I mean do you anticipate that we could see more cuts or do you trust that Deer has the the management know how to really manage those inventory levels that are piling up? Yeah, I think it ultimately comes down to what does the retail demand look like as we exit the year and head into next year. You know, farmers are incredibly challenged right now. We've we've seen a little bit of stabilization maybe these last three months on crop prices, but by and large they're down year to date. They're down significantly versus the prior year. Farmers have higher production costs. Interest rates are still quite elevated. So farm income is going to be down 26% this year. And on top of that, you have generally weaker farmer sentiment. You have uncertainty ahead of the election. And they've gone out and bought a lot of equipment over the last three years. So the age of that fleet has come down pretty precipitously. So we really kind of struggle to see a near term catalyst for a reacceleration in demand. And historically speaking these downturns really just they don't last one year. So we're looking at for a little bit more of a prolonged downturn this cycle.