Like smaller competitors AGCO Corp. (NYSE: AGCO) and CNH Global NV (NYSE: CNH), Deere’s farm equipment sales in the US and Canada rose the most as acres under cultivation continue to grow. Sales in Asia were described as “up moderately, though slowing.” The largest of the equipment makers, Caterpillar Inc. (NYSE: CAT), has much more invested in Asia, particularly China, than does any of the others, and it was that commitment to China that haunted Caterpillar when it announced quarterly results last month. More about that later.

For the current quarter, Deere expects sales to rise 25% above the same period a year ago. Prices are expected to improve by about 4%, and currency effects are expected to reduce sales by about 4%. For the fiscal year, Deere forecast sales growth of about 15%, with a 4% improvement in prices and a -3% currency exchange impact. The company also raised its total net income forecast from $3.275 billion to $3.35 billion for the year.

Deere, unlike Caterpillar, does not have significant exposure in China. Caterpillar employs 11,000 people in the country and expects that number to double by 2015. The company pointed out that just 3% of its global revenues in the first quarter were attributable to China. Although the two statements may not be linked in management’s mind, they are in investors’ minds.

When Cat had to downplay China’s role in its business, what investors took away is that business was falling in China. And the new plants and new employees in Caterpillar’s Chinese operations are now going to be a drag on earnings, not a positive. That probably won’t turn out to be the case, but that was the effect of what the company had to say.

None of these four has had a particularly good past 12 months. As of last night’s close, every one’s share price is lower than it was a year ago, with AGCO down -19%, Deere and Caterpillar down -13%, and CNH down just less than -1%. Growth in North America is not going to drive record sales, only Asia can do that. As long as the Chinese economy continues its slowed growth, sales of farm and construction equipment won’t jump off the charts.

Shares of Deere are up about 1% in the pre-market, at $77.35, in a 52-week range of $59.92-$89.70.

Paul Ausick

The unofficial closing bells put the DJIA up more than 89 points to 13,090.95 (0.69%), the NASDAQ rose more than 68 points (2.3%) to 3,029.63, and the S&P 500 rose 1.37% or nearly 19 points to 1,390.70.

There were several analyst upgrades and downgrades today, including Apple raised to ‘outperform’ at Scotia and maintained ‘buy’ with a target price of $775 at Canaccord Genuity; J.C. Penney Co. Inc. (NYSE: JCP) raised to ‘market perform’ at BMO; McDonald’s Corp. (NYSE: MCD) cut to ‘hold’ at Argus; Time Warner Cable (NYSE: TWC) started as ‘buy’ at Citigroup; Wal-Mart Stores Inc. (NYSE: WMT) cut to ‘hold’ at Argus; and Buffalo Wild Wings (NASDAQ: BWLD) raised to ‘buy’ at Deutsche Bank.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Apple is up 8.9% at $610.02 (our coverage here); Anixter International Inc. (NYSE: AXE) is down -4% at $66.76; Edwards Lifesciences Corp. (NYSE: EW) is up 11.5% at $81.74; Juniper Networks Inc. (NYSE: JNPR) is down -4% at $20.78; Norfolk Southern Corp. (NYSE: NSC) is up 3.6% at $72.77; Newfield Exploration Co. (NYSE: NFX) is up 5.2% at $35.47; AutoNation Inc. (NYSE: AN) is down -0.9% at $33.27; Clayton Williams Energy Inc. (NASDAQ: CWEI) is up 1.6% at $76.45; Corning Inc. (NYSE: GLW) is up 6.7% at $14.25; Harley-Davidson Inc. (NYSE: HOG) is up 6.1% at $53.45 after posting a new 52-week high of $53.98 earlier today; Lithia Motors Inc. (NYSE: LAD) is up 7.4% at $26.84; and US Airways Group Inc. (NYSE: LCC) is up 2.5% at $9.55 (more coverage here).

Other standouts from today include the following stocks:

Caterpillar Inc. (NYSE: CAT) is down -4.5% at $103.55. The heavy equipment maker reported declining sales in China as growth in the country has slowed, which led to the sell-off today.

CNH Global NV (NYSE: CNH) is up 3.6% at $45.66. The farm equipment maker beat EPS estimates by almost 50% and sales were also higher.

Boeing Co. (NYSE: BA) is up 5.3% at $77.06. The aircraft maker reported solid earnings and revenues this morning. More coverage here.

Stay tuned for Thursday. We have noted the following events on the schedule (all times Eastern):

• 8:30 a.m. – New unemployment benefits claims
• 8:30 a.m. – Chicago Fed national activity index
• 10:00 a.m. – Pending home sales index
• 10:30 a.m. – EIA weekly natural gas storage report
• 11:00 a.m. – Kansas City Fed manufacturing index
• 1:00 p.m. – 7-year note auction
• 4:30 p.m. – Federal Reserve balance sheet and money supply

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Paul Ausick

Annaly Capital Management, Inc. (NYSE: NLY) Raised to Outperform at Wells Fargo.
Boston Scientific Corp. (NYSE: BSX) Started as Outperform at Credit Suisse.
Career Education Corp. (NASDAQ: CECO) Cut to Underperform at BofA/ML.
Clorox Corp. (NYSE: CLX) Cut to Underperform at BofA/ML.
CNH Global N.V. (NYSE: CNH) named as Value stock of the day at Zacks.
Dendreon Corporation (NASDAQ: DNDN) Cut to Neutral at Goldman Sachs.
Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) Started as Overweight at Barclays.
Hexcel Corporation (NYSE: HXL) Cut to Neutral at BofA/ML.
Hospira Inc. (NYSE: HSP) cut to Underperform ar Bear of the Day at Zacks.
Medtronic Inc. (NYSE: MDT) Started as Outperform at Credit Suisse.
Rockwell Collins Inc. (NYSE: COL) Cut to Underperform at BofA/ML.
Sierra Wireless Inc. (NASDAQ: SWIR) downgraded at Raymond James and Morgan Keegan.
St. Jude Medical (NYSE: STJ) Started as Neutral at Credit Suisse.
Sun Life Financial Inc. (NYSE: SLF) Cut to Underperform at Credit Suisse.
Teva Pharmaceutical Industries Limited (NASDAQ: TEVA) Raised to Overweight at Morgan Stanley.
Tidewater Inc. (NYSE: TDW) Cut to Hold at Argus.
Wyndam Worldwide (NYSE: WYN) named Bull of the Day at Zacks.

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Looking ahead, Caterpillar raised its revenue guidance from $56-$58 billion to $58 billion, including about $2 billion from Bucyrus. EPS guidance was changed from $6.25-$6.75 to $6.75, including a negative impact of about $0.50 from the Bucyrus deal. The company hailed the recent passage of three free-trade agreements and “the growing understanding that we need to do something positive about infrastructure in the United States.” Needless to say, Caterpillar hopes to profit from both.

For 2012, Caterpillar continues to be optimistic. The company expects sales and revenues to increase by 10%-20%, much of which will come from Bucyrus. Caterpillar expects Bucyrus to boost total sales by about $5 billion next year. The company did not provide EPS guidance for 2012.

Of the company’s $1.14 billion in profit, more than 30% was attributed to a favorable exchange rate. The weaker US dollar clearly helped the company in the third quarter, but as the dollar gains strength profits could slow down. The company also reported weaker sales in China, and noted that sales rose in developed countries although total sales of new machines in developed countries “remain significantly below previous peak levels.”

Order backlog has climbed to an all-time high, and the company expects commodity prices to remain high enough to maintain current investment levels from Caterpillar’s customers. In developed countries, Caterpillar believes that deferred replacement of equipment will pick up modestly, while in developing countries the company expects more construction activity to drive additional sales. If sales in China continue to weaken, that may be a tough goal to reach.

Shares of Caterpillar are up about 5% a half hour before the market opens this morning, at $91.65 in a 52-week range of $67.54-$116.55. Deere is up more than 2.5%, at $74.10 in a 52-week range of $59.92-$99.80. Joy Global is up about 2.8%, at $84.10, in a 52-week range of $57.48-$103.44. The Market Vectors Agribusiness ETF (AMEX: MOO) is up about 1.5%, at $49.37, in a 52-week range of $39.86-$57.93.

Paul Ausick

In a ratings action on sovereign debt, Standard & Poor’s lowered its long-term counterparty credit rating on seven Italian banks from ‘A+’ to ‘A’ and affirmed the agency’s ratings on short-term debt at ‘A-1′. The seven banks are Mediobanca SpA, Findomestic Banca SpA, and Intesa Sanpaolo SpA and its core subsidiaries Banca IMI SpA, and Banca Infrastrutture Innovazione e Sviluppo SpA (BIIS) (BIIS), and Cassa di Risparmio in Bologna SpA. Outlooks on all seven banks is negative. S&P also lowered Banca Nazionale del Lavoro SpA (BNL) from ‘AA-/A-1+’ to ‘A+/A-1′ with a negative outlook.

Other companies getting a nod today include CNH Global NV (NYSE: CNH), Ralcorp Holdings Inc. (NYSE: RAH), Stillwater Mining Corp. (NYSE: SWC), and Fiat SpA (OTC: FIATY), owners of US automaker Chrysler.

CNH Global NV (NYSE: CNH) received ratings today from both S&P and Moody’s on the issuance of $859 million in asset-backed securities collateralized by equipment retail installment sales. CNH is a maker of tractors and other farming and construction equipment. The securities are being issued in a series of five notes, of which three senior notes received ‘AAA’ ratings from both agencies. The other senior note received an ‘A-1+’ rating from S&P and an ‘A’ rating from Fitch Ratings. The $26 million offering of Class B subordinated notes received a rating of ‘A+’ from S&P and ‘A’ from Fitch.

Ralcorp Holdings Inc. (NYSE: RAH) remained on CreditWatch with negative implications at S&P following the company’s rejection of the latest merger offer from ConAgra Foods, Inc. (NYSE: CAG). The agency remains “uncertain” concerning Ralcorp’s plan to spin-off its Post Foods group in a tax-free transaction to the company’s shareholders. S&P is dubious about Ralcorp’s ability to maintain cash flow and about Ralcorp’s plans for using the estimated $1 billion in net cash that it will receive from the spin-off.

Stillwater Mining Corp. (NYSE: SWC) received a ‘B2′ rating from Moody’s on a proposed $300 million in senior unsecured notes due 2016. The company’s outlook is rated stable. In a related action, the agency upgraded $30 million in unsecured Montana Board of Investments revenue bonds from ‘Caa1′ to ‘B2′. Stillwater plans to use some of the proceeds from the $300 million issuance to pay part of the cash portion of its $487 million acquisition of Peregrine Metals announced in July.

Fiat SpA (OTC: FIATY) received a downgrade to its corporate family rating and its probability of default rating from Moody’s. Both ratings went down one notch, from ‘Ba2′ to ‘Ba1′. At the same time the agency lowered debt ratings with a negative outlook on three of Fiat’s finance subsidiaries in North America. Moody’s noted that this is the final change related to Fiat’s increase in its stake of Chrysler. Interestingly, what many analysts have seen as a plus in Fiat’s acquisition of Chrysler is the promise of using common technology and parts in all the combined companies’ cars. Moody’s views that as a negative, stating that it “could result in the two companies having to support each other in the event of financial difficulty,” even though Fiat does not guarantee Chrysler’s debt.

Paul Ausick

CNH Global N.V. (NYSE: CNH) reported quarterly earnings a couple of weeks ago and easily topped expectations. AGCO Corp. (NYSE: AGCO) also posted sterling results for its second quarter. Caterpillar Corp. (NYSE: CAT) reported very solid numbers in July — and the stock fell. That’s happening to Deere today as well. All four are down year-to-date.

Because earnings and revenues have been robust on the strength of demand for agricultural and other heavy equipment, it could be that investors have set expectations too high. Nothing less than spectacular will do.

Or it could be that the stocks are fairly valued now and were overbought before. Caterpillar’s forward multiple is 9.63, CNH’s is 8.11, AGCO’s is 8.66, and, based on today’s earnings report, Deere’s is slightly more than 11. Those numbers seem a little low.

What could be going on is that despite the these companies’ own forecasts for continue sales and profits, investors are more concerned with the cost side of things. Deere’s operating margin in its agricultural machinery division fell from nearly 39% in the same period last year to 33% this quarter. Rising raw materials costs are a legitimate concern, especially if other factors could begin to influence sales.

For example, Deere has projected lower sales in South America this year, an area where the company has been very strong. The company forecasts North American sales up 5%-10% on the year, but a report from an agricultural trade group notes that sales of tractors in the US are down slightly year-to-date, and were down -7.4% in the month of July.

Predictions for lower corn yields and a lower-than-expected harvest could also be adding pressure to farm equipment purchases. Even the increased availability of wheat on international markets due to Russia’s decision to resume exports could be stifling sales somewhat.

Fertilizer stocks are performing somewhat better overall due primarily to the fact that adding more fertilizer to increase yields is cheaper and more effective than buying new equipment. Shares of CF Industries Holdings Inc. (NYSE: CF) have gained about 25% year-to-date, and shares in Potash Corp. of Saskatchewan are up about 8% in the same period.

Deere’s shares are down about -1% just after noon today, at $74.44, in a 52-week range of $60.45-$99.80. Volume has already surpassed the daily average. Caterpillar stock is down about -1.35%, at $88.14, in a 52-week range of $63.34-$116.55. Shares of CNH are down more than -2%, at $30.58, in a 52-week range of $27.01-$54.45, and AGCO shares are down more than -3%, at $39.23, in a 52-week range of $32.36-$59.81.

Shares of PowerShares Agriculture Fund are up about 0.7%, at $33.09, in a 52-week range of $25.63-$35.58. The Market Vectors Agribusiness ETF (NYSE: MOO) is up about 0.25%, at $50.15, in a 52-week range of $42.35-$57.93.

Paul Ausick

Rising corn prices, now above $7.66/bushel, is almost certain to drive cattle prices higher because ranchers are not increasing their herd sizes as they normally would with rising cattle prices because corn prices are rising faster. The PowerShares DB Agriculture ETF (NYSE: DBA) and the Market Vectors Agribusiness ETF (NYSE: MOO) are both trading essentially flat so far today.

Other ag-related stocks are also showing little movement today. Tyson Foods Inc. (NYSE: TSN), Smithfield Foods Inc. (NYSE: SFD), and Hormel Foods Corp. (NYSE: HRL) are trading essentially flat. Farm equipment makers Deere & Co. (NYSE: DE), CNH Global N.V. (NYSE: CNH), and AGCO Corp. (NYSE: AGCO) are all trading down about -1%. Fertilizer maker Mosaic Co. (NYSE: MOS) reported earnings today, and missed revenue expectations. However, the company sold 2.4 million tons of its phosphate fertilizers at $543/ton, way above last year’s sales price of $336/ton. The company also guided phosphate sales between 2.5 and 2.9 million tons for its fourth fiscal quarter ending in May.

Cocoa prices continue their slide as United Nations and French troops supporting the elected president of Ivory Coast, Alassane Ouattara, are negotiating with forces of the outgoing president, Laurent Gbagbo, who refused to relinquish power. Cocoa futures have fallen from a high of $3,775/ton early this month to $2,982, and the drop is expected to continue as hundreds of thousands of tons of cocoa in Ivory Cost warehouses are released into the market.

Chocolate makers Hershey Co. (NYSE: HSY) shares are up more than 1% today. The world’s largest maker of bulk chocolate, Swiss-based Barry Callebaut AG, said earlier that it would be able to meet its contractual obligations to Hershey, Nestle SA, and Kraft Foods Inc. (NYSE: KFT) without relying on Ivory Coast supplies.

Gold and silver are also continuing to set record highs. Gold is trading above $1,450/ounce, and silver has risen to more than $39/ounce. The SPDR Gold Shares ETF (NYSE: GLD) is up more than 1% today, and the iShares Silver Trust (NYSE: SLV) is up more than 1.5%. Gold miners are faring better, with the Market Vectors Gold Miners ETF (NYSE: GDX) up about 3.5% and the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) up about 3.75%. The Global X Silver Miners ETF (NYSE: SIL) is up about 3% as well.

West Texas Intermediate crude is off slightly, to below $108/barrel, while Brent crude is up to more than $122/barrel. The WTI price could fall further as the United States Oil ETF (NYSE: USO) begins to rollover its contracts tomorrow. WTI is priced at delivery at the storage facility in Cushing, Oklahoma, which is absolutely full to the top. Because the USO rolls its contracts forward every month, more oil that could presumably flow into the tanks at Cushing have to go somewhere else. Either refiners have to take the barrels or the barrels have to be exported. In either event, WTI prices are almost certain to fall. The question, of course, is by how much.

Paul Ausick

But the difference is outlook. Where CNH and AGCO saw the glass as half-empty, Deere sees a glass that is half-full. AGCO, in particular, was cautious about sales in Brazil, and came in with a full-year EPS estimate of $2.50-$2.75, where analysts had been predicting EPS of $2.94.

Deere, however, raised its profit forecast to $2.5 billion, up from its previous forecast of $2.1 billion. The company also expects sales growth of 18%-20%, up from a previous forecast of up 10%-12%. The expected profit calculates out to EPS of about $5.90, nicely higher than analysts’ estimates of $5.49.

Both AGCO and Deere expect sales of its farm machinery to remain strong in North America, but growth is unlikely to be as high as in either Europe or South America. Deere also expects sales in its construction and forestry equipment division to grow by 35% in 2011, primarily on sales to equipment rental firms and an improvement in forestry markets where wood and pulp prices are currently high and expected to stay that way.

Deere & Co. shares set a new 52-week high this morning of $97.36, putting its 52-week range at $52.73-$97.36.

Paul Ausick

Potash Corp. reported fourth-quarter EPS of $1.61, including a charge of $0.16/share that the company spent to fend off a $38.6 billion takeover by BHP Billiton Ltd. (NYSE: BHP). The company posted revenue of $1.81 billion. Analysts were expecting EPS of $1.65 on revenue of $1.63 billion. In the same period a year ago, Potash Corp. posted EPS of $0.79 on revenue of $1.1 billion.

Caterpillar might be thought of as more of a mining play than just agriculture, but history has shown that the two are often intermingled.  The equipment giant reported EPS for its fourth-quarter of $1.47 on sales of $12.8 billion. Analysts were expecting EPS of $1.27 on sales of $11.63 billion. CNH also reported earnings this morning. In the fourth quarter, the company posted EPS of $0.90, excluding restructuring and one-time charges, on sales of $3.76 billion. Analysts were expecting EPS of $0.45 on sales of $3.7 billion.

Both the fertilizer-maker and the two equipment makers benefited from rising food and commodity prices. And all three of the companies expect to increase their profitable ways in 2011.

Potash Corp. announced a three-for-one stock split yesterday and also raised its quarterly per share cash dividend from $0.10 to $0.21, on a split-adjusted basis. In the announcement, the company’s CEO noted that doubling the company’s dividend “reflects the confidence we have in the long-term drivers of our business.”

For 2011, Potash Corp. guided first-quarter EPS to $2.10-$2.70 and full-year EPS to $8.40-$9.60 on a pre-split basis. Analysts were expecting first-quarter EPS of $2.24 and full-year EPS of $8.89, pre-split.

Caterpillar expects 2011 sales to top $50 billion and EPS to be around $6.00. For 2010 the company had sales of $42.6 billion and EPS of $4.15. CNH expects 2011 revenue to rise by up to 10% and operating margins to be in the range of 7.1%-7.9%. In 2010, CNH posted total sales of $14.5 billion. For 2010, ag equipment operating margins were 7.1%, while construction equipment operating margins were -4.5%. CNH’s sales of ag equipment is roughly four times sales in construction equipment.

The continued growth in fertilizer and equipment sales stems from strong demand for potash fertilizer and strong demand for mining equipment. Caterpillar’s outlook is particularly strong because the company does not include sales from Caterpillar’s acquisition of Bucyrus International Inc. (NASDAQ: BUCY), which has not closed yet.

What about Mosaic Co. (NYSE: MOS)?  It blew out earnings earlier in January, and now the Cargill majority stake divestiture may have the company in play for sale.  Shares are still lower as they are under $80.00 versus above $85.00 when this was first announced, but the stock has also recovered from lows under $74.00.  And what about Market Vectors Agribusiness ETF (NYSE: MOO)?  Its shares are up 0.5% at $55.63 versus a 52-week range of $35.56 to $57.02.  As agriculture keeps doing better and as the components keep rising, so do its shares.

Shares of Potash Corp. are up nearly 4% in pre-market trading, while Caterpillar shares are up about 1.5% and CNH has seen no action. If Caterpillar’s pre-market price holds, it would mark a new 52-week high for the company. All three have posted new 52-week highs since the beginning of the year.

Paul Ausick

Large producers like Archer Daniels Midland Co. (NYSE: ADM) and Bunge Ltd. (NYSE: BG) should benefit from higher wheat and grain prices. Fertilizer makers such as The Mosaic Co. (NYSE: MOS), Monsanto Co. (NYSE: MON), and Potash Corp. of Saskatchewan (NYSE: POT) might get the biggest boost as farmers plant fewer acres but try to increase yields. In fact, we have already been given two very positive trend indications for fertilizer and planting outlooks in the last week.  Equipment makers like Deere & Co. (NYSE: DE) and CNH Global NV (NYSE: CNH) could also benefit as farmers use their increased profits to buy new equipment.

The USDA expects global wheat consumption to be 1.2 million tons below previous expectations, mostly on lower demand for feed. Wheat prices will be stronger, rising from an average price of $5.30-$5.70/bushel in the current marketing year to $5.50-$5.80. Global wheat imports and exports are expected to rise slightly, and the US is expected to export about 1.3 billion bushels of wheat, the most since 1992-1993.

US corn supplies are expected to be lower as a reduction in the national average yield lowers production by 93 million bushels even as acreage planted in corn increases by 183,000 acres. The primary support for added corn production is ethanol, which is expected to demand an additional 100 million bushels this year. Because supplies are slightly tight, ethanol makers like ADM, Valero Energy Corp. (NYSE: VLO), and Pacific Ethanol Inc. (NASDAQ: PEIX) could face higher prices for feedstock.

US consumers can also look forward to higher prices for beef, pork, and eggs, but they’ll get a break on chicken. Cotton production is expected to be down slightly, and the amount of cotton remaining in stockpiles at the end of January is expected to be just 1.9 million bales (a bale weighs 480 pounds).

In the 2008-2009 crop year, some 6.34 million bales were in stocks, at a price of $0.478/pound. The cotton price this year is projected at $0.78-$0.86/pound. This cost jump is already showing up in costs at apparel makers like Liz Claiborne Inc. (NYSE: LIZ), which are being squeezed by high prices for cotton and demand from customers for low-priced clothes.

From a producers point of view, the USDA report augurs well for the coming year. Consumers, however, are not likely to share the joy.  Clarence Beeks lives on…

Paul Ausick