Oh, Deere: Results, Guidance Underwhelm Wall Street

NEW YORK (TheStreet) -- Deere(DE) shares were in the red early Wednesday despite what appeared to be a bullish quarterly report, issued before the market open, in which the company lifted its financial guidance for the year.

Deere's stock, which was declining by about 2% to $85.97 in early trading Wednesday, closely follows the conditions in the agricultural-commodities markets. But not on this day. Corn and soybean futures contracts on the Chicago Mercantile Exchange were both rising Wednesday morning on concerns about the continuing impact of wet weather -- the cause of the Mississippi floods -- on the planting of those crops in the Midwestern farm belts.

There appears to be some conflicting sentiment on that score, however. Some commodities watchers think the predictions of a crop stunted by springtime rains are overblown. According to the USDA's latest update on the progress of U.S. planting in the 18 highest-producing farm states, 63% of the corn crop is in the ground as of May 15. That's better than the 60% that commodities players were expecting, but below the five-year average of 75% by the middle of May, says Chris Damas, a commodities-focused investor and analyst based in Ontario.

Most other agricultural-linked names were rising Wednesday, including fertilizer producers like Potash(POT) and Agrium(AGU).

Crop prices have rallied the last few sessions after a sharp drop earlier in May sparked fears that a long and record-breaking boom in commodities had at last come to an end. One worry has been that the conclusion of the Federal Reserve's quantitative easing program would cut off a spigot of low-cost money that had fueled speculative "risk-trade" bets in the commodities markets. Another worry has been, simply, a precarious global economic recovery that has shown signs of stalling.

As for Deere, the Moline, Ill., company told Wall Street to expect fiscal 2011 earnings of $2.65 billion. That includes a $300 million ding from supply-chain disruptions caused by another natural disaster, the Japanese earthquake and tsunami.

Converting that into EPS, Deere would earn $6.29 a share, better than the current consensus forecast among Wall Street analysts, which calls for $6.24 a share.