Farm equipment makers, fertilizer producers plunge on recession risk

Jun. 23, 2022 2:19 PM ETCaterpillar Inc. (CAT), DE, MOSAGCO, CF, NTR, NTR:CABy: Carl Surran, SA News Editor96 Comments

Dmytro Skrypnykov/iStock Editorial via Getty Images

Dnipro. Ukraine 10 July 2021. Two harvesters machine John Deere to harvest wheat field working.

Farm equipment manufacturers Caterpillar (NYSE:CAT), Deere (NYSE:DE) and AGCO (AGCO) all plunge to new 52-week lows in Thursday's trading, -6%, -6.9% and -8.8%, respectively, as Federal Reserve Chair Jerome Powell's testimony before a House committee seemed to amplify concerns of a coming recession.

In the second day of congressional testimony, Powell emphasized the Fed would not stop tightening monetary policy until there were clear signs that inflation had peaked.

AGCO (AGCO) also was hit by a downgrade at Morgan Stanley, as investors begin to price in some degree of recession from 2023 in machinery multiples.

Fertilizer makers Mosaic (NYSE:MOS) and CF Industries (CF) are the day's two biggest losers on the S&P 500, -8.8% and -8.6% respectively, with Nutrien (NTR) also falling sharply, -7.3%.

Fertilizer prices surged to records after Russia's invasion of Ukraine caused fears of a shortage; prices have been declining in recent weeks, but Bloomberg analyst Marina Cavalcante said farmers still are not buying, choosing to wait for further declines.

Mosaic's (MOS) revenues and profitability "could peak in FY 2022 before declining markedly from 2023," JR Research writes in a bearish analysis published on Seeking Alpha.

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