What's going on?

John Deere makes tractors. Tons of them (as well as other farm equipment). But with crop prices so low, Deere has been struggling with declining sales. The good news is that while profits have declined, Deere is not doing as poorly as investors feared and it says the future won�t be too bad either. The stock rose almost 5% on Wednesday as a result.

What does this mean?

The price of crops like corn and wheat have halved since their peak in 2012. That�s led to lower profits for farmers and, in turn, to fewer sales for Deere. A measure of farmer�s income (called �net farm sales� is down 38% versus last year and is half of what it was in 2013. So Deere has faced a big decrease in demand. Also, like other American companies, the strong US dollar hurts Deere�s international sales (because Deere tractors become more expensive for overseas buyers).

Why should I care?

1. The bigger picture: Prices of many agricultural commodities (a.k.a.. crops) are at multi-year lows. There have been record harvests for corn, soybeans and other crops in recent years -- so supply has increased massively. But demand has decreased as countries overseas buy fewer crops (amongst other reasons). Thus, farmers are left with oversupply and declining profits while the rest of us get (marginally) cheaper food.
2. For the stock: Deere�s predictions for next year�s sales need to be accurate. Despite all the bad news, Deere says it expects to fare better this time than during previous downturns with sales next year dropping �only� 7%. The stock jumped on Wednesday partly because it gave such decent guidance for next year. But if Deere fails to meet it, then the stock will likely decline.