I learned a lot at this year's Industry and Economic Outlook Conference #IEOC presented by the National Fluid Power Association #NFPA. (I know that the hash tags are all about Twitter but I like using them:)) We were treated to a report from Ann Duignan, Managing Director at J.P. Morgan Securrities LLC who specializes in the U.S. machinery sector. Her talk was titled Agricultural Machinery Outlook.
It was great to have someone of Ann's position present information to marketers of fluid power components with a very large end use market being Agricultural Machinery. Ann focused on factors that drive machinery sales, like farm production. I am not quoting Ann here but trying to comment on some of the points made in her presentation as it affects our industry.
It appears that agricultural equipment sales remain OK for now. However, the corn crop is having its worst year since 1988 and this will impact machinery sales. Bean production is even worse than corn. This will certainly affect food prices as well.
The poor corn crop could impact ethanol but that is not a good option because energy companies like the ethanol mix. It could also impact the dairy industry because of corn being a staple for dairy cows.
There will be a big ripple effect from this year's significant draught. However, even this draught season that rivals the dust bowl years, GMO seeds have still yielded a strong bushel per acre total which is a strong statement for GMO seed.
All in all, it has been a difficult year for farmers and we probably won't know the total impact of the draught until next year or so. With that being said, agricultural machinery is still stable and still represents very important national and global market for fluid power components and systems.
I really enjoyed Ann's presentation and I learned a lot. I hope that she comes back next year for an update.