What's going on?

On Friday, agricultural equipment-maker Deere lowered its annual earnings forecast for the second time this year, while reporting quarterly results that stumbled short of investors� expectations.

What does this mean?

In July, China stopped buying US agricultural products as the two continued to trade blows over… well, trade � turning instead to Brazil, Russia, and Canada for soybeans. Deere�s American farmers � whose purchases represent 60% of the company�s revenue � are now likely to buy fewer products, explaining the firm�s darkened outlook.


Even before China�s hiatus, bad Stateside weather alongside the expectation of Chinese retaliation stopped farmers from buying as much from Deere. And all-American machinery company Caterpillar was hit by the trade war too: the firm missed forecasts due to prohibitive tariffs and reduced Chinese demand. Caterpillar and Deere are widely seen as indicators � or bellwethers � of the economy�s health, and global investors may be concerned.

Why should I care?

The bigger picture: Plant it and they will come.

While it�s been fallow times for soybean farmers, corn farmers have been sowing the seeds of success. Data last week showed they planted more than predicted, even though spring showers severely delayed the start of planting season. Farmers have been known to under-report production: the perception of low supply works in their favor, pushing prices higher. But the price of corn futures fell dramatically � perhaps because investors think even more of the foodstuff is coming than recent surveys suggest.

For markets: China slides down the ranks.

China used to be the biggest non-US holder of American government bonds, but it appeared to be selling them in recent months (in response to trade tariffs, some analysts thought). And despite another change of heart in June, where The People�s Republic increased its holdings, Japan has now taken the top spot. China�s still a pretty influential investor, mind, with over $1 trillion in US IOUs � but its buying and selling may now attract less scrutiny from other investors.