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Why Deere thinks satellites are the subsequent big technology to speculate in


Drones, robotics technology, and now satellites.

John Deere’s Chief Technology Officer Jahmy Hindman told CNBC the world’s largest agriculture equipment player is within the strategy of finalizing a satellite partner.

“We actually have been focused on trying to unravel connectivity, globally. We take a look at the burgeoning efforts which can be happening in low Earth orbit satellites for example – potentially – for us to begin to unravel some those connectivity issues.”

The goal is to create a geospatial map that farmers can use to raised track productivity and the performance of crops.

“There’s a lot friction and getting that data from the sphere into the cloud, where they will do something useful with it, that it really is not used very effectively in any respect.” As to when satellites will change into in use, Hindman said Deere is “right on the cusp” of solving the connectivity problem for farmers.

Currently, farmers can use the info collected by its See & Spray device to grasp what a part of the farm still must be fertilized. It’s one in every of the technologies that will likely be showcased on the Consumer Electronics Show in Las Vegas on Thursday.

While the worldwide economy could also be slowing, the agriculture market stays hot. Crop prices, albeit volatile, are still up double digit percentage points from three years ago. Rising crop prices, including wheat and corn, have fueled farmer profits. In actual fact, DA Davidson citing USDA numbers says corn money receipts were up 32% in 2022 in comparison with the yr prior. 2023 money receipts are expected to be even higher, writes Michael Shlisky, senior research analyst at DA Davidson in client note. An added bonus: fertilizer and chemical prices have eased in recent months, improving the outlook for farmers this yr.

With more cash within the bank, farmers are expected to proceed spending on agriculture equipment, where John Deere stays a frontrunner.

Shares of Deere gained 20 percent in 2022, vastly outperforming the XLI Industrials ETF, which lost 7 percent. Gabelli Funds has been a longtime investor within the agriculture equipment maker and stays bullish.

“We might expect the stock to perform well because the yr sets up as one for the industry. Limited supply has effectively elongated the cycle while keeping used machinery prices high. At the identical time, the corporate continues to supply technologies that make the farmer considerably more productive than the machines utilized in each previous version,” said Brian Sponheimer, portfolio manager at Gabelli Funds to CNBC.

Supply chain issues have plagued Deere and the broader sector, but Hindman is betting that China’s reopening should ease among the pain in 2023.

 “Along with being a big agricultural consumer, they’re one in every of the world’s largest producers of the things that all of us need to be able to fill our supply chains. We do hope China reopens in 2023. The provision chain will begin to normalize and stabilize a bit,” said Hindman.

The large wild card: the continued war in Ukraine which has sent agriculture prices skyrocketing. In response to Melius Research, wheat prices spiked 40% within the six months after the war began, and at the moment are 20% above pre-war prices.

“The war has definitely added uncertainty to crop prices,” Rob Wertheimer, founding partner of Melius Research, told CNBC.

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