Market Reacts to Ethanol Talk

Cindy Zimmerman

Deere Agco All this ethanol talk was good for business on Wednesday. Shares for farm equipment companies like John Deere and Agco posted gains in trading today on ideas that increased ethanol production will mean more tractors and combines will be needed. According to MarketWatch, Morgan Stanley reiterated its overweight rating on Deere Wednesday and called ethanol the “key energy theme in 2006.” Pent-up demand for equipment replacement on farms and higher corn production should drive machine purchases, according to the analysts. “Ethanol is a rare win-win for nearly all involved,” wrote analyst Stephen Volkmann. “Farmers get higher crop prices, consumers get away from imported energy, environmentalists get renewable and cleaner burning fuel and government gets to send less direct aid to farmers.”