A November 19 research notes report from UBS shared that the company visited 12 farm dealers (7 Deere, 3 Case, 1 New Holland/AGCO and 1 Challenger/AGCO) in Missouri, Kansas and Nebraska. “While farmers bought some equipment ahead of 2011 Tier 4 engine standards, dealers generally believed sales could be 10% higher in 2011 given strong farmer confidence due to high commodity prices. Additionally, while used combine inventories are a concern, dealers saw the issue as manageable.”

The report went on to say that "Dealers were bullish on 2011 new equipment demand, as 70% expect higher sales next year (and 50% expect sales to grow 5%+) ...Given our channel checks’ increased visibility to improved farm equipment sales in 2011, we are
increasingly bullish on the farm equipment cycle.”

The firm’s research notes showed that UBS is upgrading Deere and AGCO, and raising its price targets on Deere, CNH Global and AGCO. “We see Deere as our preferred way to play the ag equipment cycle as beats over the next few quarters should be a catalyst for outperformance."