Input costs could be coming down

Agricultural companies’ bottom lines are taking a hit for a slew of reasons, including uncertainty around tariffs, higher costs and avian flu, but the firms are hoping the tide will turn later this year.

These companies, which sell seeds, fertilizer, equipment and other supplies to the nation’s farmers, are hoping higher grain prices and lower costs will give farmers wiggle room to spend more money–in turn bolstering profits for the companies that sell to them.

On Thursday farm-equipment provider Deere DE 0.60%increase; green up pointing triangle & Co. said it expects the stubbornly high input costs faced by U.S. farmers in recent years to ease–which may, albeit slowly, allow farmers to increasingly return to purchasing more new farm equipment like tractors and augers.

Input costs–the cost of materials that farmers need in order to work on their farms and grow crops, such as fertilizer, fuel for their farm machinery, and labor–have been easing for three years straight, said Deere director of investor relations Josh Beal on the call.

To be sure, potential fallout from the Trump administration’s tariff plans means farmers, and the companies that serve them, face continued uncertainty around costs. Stay Tuned.

Source: WSJ