Dealer’s Confidence Highest Since 2004

Ag-equipment stocks could soon see a rebound as machinery is in greater demand after a surge in commodity prices, Bloomberg reports.

Demand for farm machinery is rising along with prices, according to a recent report by Henry Kirn, a UBS analyst. He based this conclusion on a semiannual survey of U.S. dealers for AGCO, CNH and Deere & Co. equipment.

“Dealers are generally optimistic,” Kirn wrote. Seventy-one percent of the survey participants expect sales to increase this year. The percentage is the highest since 2004. Prices for new and used farm machines are generally rising, the report said, and inventories of older gear are below normal levels.

AGCO and CNH were raised to “buy” from “neutral” at UBS in response to the results. Their shares had losses of 12% and 14% for May, respectively. Deere, previously rated “buy,” was 13% lower.

UBS has conducted the farm-equipment dealer survey since 1997. The latest results were based on responses by more than 300 dealers to a mailing in late March. ◆