Why Deere thinks satellites are the next big technology to invest in

Drones, robotics and now satellites.

Jahmy Hindman, John Deere’s chief technology officer, told CNBC that the world’s largest farm equipment supplier is finalizing a satellite partner.

investment related news


“We’ve really focused on solving connectivity globally. We see the burgeoning efforts in satellites in low-Earth orbit as an example – potentially – for us to start addressing some of these connectivity issues.”

The goal is to create a geomap that farmers can use to better track crop productivity and performance.

“There’s so much friction and moving that data out of the field and into the cloud where they can do something useful with it that it really isn’t being used very effectively at all.” In terms of deploying the satellites, Hindman said Deere is ” on the verge of solving the connectivity problem for farmers.

Currently, farmers can use the data collected by his See & Spray device to understand which part of the farm still needs fertilizing. It’s one of the technologies being unveiled at Thursday’s Consumer Electronics Show in Las Vegas.

As the global economy slows, the agricultural market remains hot. Crop prices, while volatile, are still double-digit higher than three years ago. Rising crop prices, including wheat and corn, fueled farmers’ profits. In fact, citing USDA numbers, DA Davidson says corn revenue in 2022 is up 32% year over year. Cash earnings in 2023 are expected to be even higher, writes Michael Shlisky, senior research analyst at DA Davidson, in a note to clients. An added bonus: Fertilizer and chemical prices have fallen in recent months, improving the prospects for farmers this year.

With more money in the bank, farmers are expected to continue spending on farm equipment, where John Deere remains leading.

Deere shares are up 20% in 2022, clearly outperforming XLI Industry ETF that lost 7%. Gabelli Funds has been investing in the agricultural machinery manufacturer for a long time and remains optimistic.

“We expect the stock to do well as the year looks good for the industry. The limited supply has effectively lengthened the cycle while keeping used machine prices high. At the same time, the company continues to deliver technology that makes the farmer significantly more productive than the machines used in any previous version,” Brian Sponheimer, portfolio manager at Gabelli Funds, told CNBC.

Supply chain issues have plagued Deere and the broader industry, but Hindman is betting China’s reopening will ease some of the pain in 2023.

“Not only are you a big agricultural consumer, you’re also one of the world’s largest producers of things that we all need to fill our supply chains. We hope China will reopen in 2023. The supply chain will gradually normalize and stabilize,” Hindman said.

The big joker: the ongoing war in Ukraine, which caused agricultural prices to skyrocket. According to experts, any course change could affect the price position and thus the “feeling of prosperity” of farmers.

Leave a Comment