Analysts predict that John Deere will raise its profit forecasts for the year on Friday, despite a dismal year for crop prices. Bloomberg reports that a possible reason for the farm equipment company’s rising profits could be the mechanical needs of large, consolidated mega-farms.
The largest farms rely heavily on mechanized planting and harvesting equipment, and are more likely to replace failing equipment before the season starts. They are also more likely to buy new equipment than farmers with smaller parcels of land, who may buy used equipment instead. Deere tractors can cost as much as hundreds of thousands of dollars.
Deere has around a 30 percent market share and reported revenues of nearly $27 billion in 2016.