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Market Fundamentals

December 2016 / January 2017

Safe Harbor Statement & Disclosures


This presentation includes forward-looking comments subject to important risks and
uncertainties. It may also contain financial measures that are not in conformance with
accounting principles generally accepted in the United States of America (GAAP).
Refer to Deeres reports filed on Forms 8-K (current), 10-Q (quarterly), and 10-K (annual) for
information on factors that could cause actual results to differ materially from information in this
presentation and for information reconciling financial measures to GAAP. Past performance may
not be representative of future results.
Guidance noted in the following slides was effective as of the companys most recent earnings
release and conference call (23 November 2016). Nothing in this presentation should be
construed as reaffirming or disaffirming such guidance.
This presentation is not an offer to sell or a solicitation of offers to buy any of Deeres securities.

Table of Contents
Slide
Agriculture Fundamentals
Construction & Forestry Fundamentals

4
21

Agriculture Fundamentals

Global Stocks-to-Use Ratios


60%

120%

50%

100%

40%

80%

Cotton

Corn

30%

20%

60%

40%

Soybean

20%

10%

0%

1995

Source: USDA, 9 November 2016


5

1998

2001

2004

2007

2010

2013

2016P

0%

Cotton Ratios

Wheat

Global Grain Supply and Demand


3,000

Million Metric Tons

2,500

2,000

1,500

1,000

500

92/93

94/95

96/97

98/99

00/01

02/03

Production
Source: USDA, 9 November 2016
6

04/05

06/07

08/09

Consumption

10/11

12/13

14/15

16/17

Global Grain Demand

With and Without Biofuel Use


3,000

Million Metric Tons

Million Metric Tons

3,000

2,000

1,000

1,000

0
2005

2007

2009

2011

2013

Consumption with biofuel use

* Compound Annual Growth Rate


Source: OECD-FAO Agricultural Outlook 2016-2025, July 2016
7

2,000

2015

2017F

2005

2007

2009

2011

2013

2015

Consumption without biofuel use

2017F

U.S. Farm Cash Receipts


$500

$ Billions

$400

$300

$200

$100

$0

2001

2003

2005

2007

Crops

Livestock

Source: 20012015: USDA, 30 August 2016


2016F2017F: Deere & Company forecast as of 23 November 2016
8

2009

2011

Government Payments

2013

2015

2017F

U.S. Farm Balance Sheet


$3,500

30%

$3,000
25%

$ Billions

$2,500

$2,000
20%
$1,500

$1,000

15%

$500

$0

1973

1977

1981

Farm Debt

1985

1989

Farm Equity

Source: 19732015: USDA, 30 August 2016


2016F2017F: Deere & Company forecast as of 23 November 2016
9

1993

1997

2001

Debt to Equity Ratio (%)

2005

2009

2013

Debt to Asset Ratio (%)

2017F

10%

Agricultural Growth Energy


U.S. Corn Used in Ethanol
6,000

Millions of Bushels

5,000

4,000

3,000

2,000

1,000

00/01

02/03

Source: Informa, November 2016


10

04/05

06/07

08/09

10/11

12/13

14/15

16/17F

EU 28

Macroeconomic Data
16%

GDP Composition
2%

12%
24%

8%

4%

0%

74%

-4%

Services

-8%

Industry

Agriculture

Source: The World Factbook, 2015 est.


-12%

Interest
Rate

Inflation

Unemployment

2014
Source: IHS Global Insight, November 2016
11

GDP
Growth

2015

Germany

UK

France

GDP Growth Major Economies

2016F

EU 28

Ag Economic Data

Growth potential for Western Ag equipment


industry in Central & Eastern Europe
Ongoing farm & Ag land consolidation and yield
improvements

Average farm size ~ 16 hectares


Number of farms ~ 11 million

US$ Billions

Utilized agricultural area ~ 190 million hectares


Arable land ~ 110 million hectares

Crop Value of Production

$150
$120
$90
$60
$30
$0

2008

2011

2014

2017F

Includes wheat, barley, corn, sunflower seed, rapeseed, soybean, sugar beet,
cotton, rice
Source: IHS Global Insight, November 2016

Share of the World Market

Source: FAO, Eurostat Agricultural Census 2013


12

Production

Net Exports

Total Grains

15%

7%

Wheat

21%

15%

Barley

42%

30%

Pork Meat

21%

34%

Cow Milk

30%

37%

Source: USDA, November 2016; average 2014-2016


(Total Grains: excludes rice; Cow Milk: net exports of cheese)

Brazil

Macroeconomic Data
16%

GDP Composition

12%

5%

8%

23%

4%

0%

72%

-4%

Services

-8%

-12%

Agriculture

Source: Brazilian Institute of Geography and


Statistics (IBGE), 2015
Interest
Rate

CPI
Inflation

2014
Source: IHS Global Insight, November 2016
13

Industry

Unemployment

2015

2016F

GDP
Growth

Brazil

Ag Economic Data

~ 17 million hectares brought into production


from 2002-2012 (~ half from pasture)
~ 25 million hectares will be brought into
production from 2013-2025

~ 12% CAGR in industry equipment sales


through the end of the decade**

US$ Billions

Agricultural area ~ 279 million hectares*


Arable land & permanent crop ~ 83 million
hectares

Crop Value of Production

$150
$120
$90
$60
$30
$0

2008

2017F

Share of the World Market

Number of farms ~ 5 million

Production

Net Exports

31%

41%

Corn

8%

19%

Sugar

21%

44%

Beef

16%

18%

Chicken

14%

36%

Soybean

14

2014

Includes key grains, ethanol, sugar


Source: IHS Global Insight, November 2016

Average farm size ~ 64 hectares

* Includes pasture, excludes double crop


** Deere & Company forecast as of 23 November 2016 (volume only, compared with
2016 volume)
Source: FAO, Conab, Brazilian Institute of Geography and Statistics (IBGE)

2011

Source: IHS Global Insight, November 2016; average 14/15-15/16

CIS

Macroeconomic Data
16%

GDP Composition (Russia)

12%

4%

8%
36%
4%
60%

0%

-4%

Services

-8%

Industry

Agriculture

Source: The World Factbook, 2015 est.


-12%

Interest
Rate

Inflation

Unemployment

2014
Source: IHS Global Insight, November 2016
15

GDP
Growth

Russia

2015

2016F

Ukraine

Kazakhstan

GDP Growth Major Economies

CIS

Ag Economic Data

Significant opportunities to improve yield rates


in all major crops*
Land under cultivation (sown crops) expected to
remain nearly flat over the next decade
Western-style equipment used on <25% of
farm land

US$ Billions

Utilized agricultural area ~ 560 million hectares


Arable land ~ 195 million hectares

Crop Value of Production

$150
$120
$90
$60
$30
$0

2008

2017F

Share of the World Market

Number of farms ~ 0.5 million

Production

Net Exports

Total Grains

10%

21%

Wheat

16%

24%

Barley

24%

34%

4%

16%

53%

27%

Corn
Sunflower

16

2014

Includes wheat, barley, corn, sunflower seed, rapeseed, soybean, sugar beet
Source: IHS Global Insight, November 2016

Average farm size ~ 995 hectares

* Deere & Company forecast as of 23 November 2016


Source: FAO, CIS farm statistics 2006-2007 (Russia, Ukraine and Kazakhstan)

2011

Source: USDA, November 2016; average 2014-2016


(Total Grains: excludes rice)

China

Macroeconomic Data
16%

GDP Composition

12%

9%

8%

48%

4%
43%
0%

-4%

Services

-8%

Industry

Agriculture

Source: The World Factbook, 2015 est.


-12%

Interest
Rate

Inflation

2014
Source: IHS Global Insight, November 2016
17

Unemployment

2015

2016F

GDP
Growth

China

Ag Economic Data

Annual industry tractor sales ~ 300,000 units


Rural population % of total declined 15% from
2003-2014
Average farm size ~ 0.47 hectares

US$ Billions

Utilized agricultural area ~ 515 million hectares


Arable land & permanent crops ~ 122 million
hectares

Crop Value of Production

$300
$225
$150
$75
$0

2008

18

2014

2017F

Includes corn, wheat, rice, barley, sorghum, oilseeds, peanut, sugar, cotton
Source: IHS Global Insight, November 2016

Number of farms ~ 257.7 million in 2012

Source: FAO, IHS Global Insight, China National Bureau of Statistics

2011

Share of the World Market


Production

Exports

Total Grains

21%

0.5%

Wheat

18%

0.7%

Corn

22%

0.0%

Rice

30%

1.8%

Cotton

23%

0.5%

Source: IHS Global Insight, November 2016; average 2014-2016

India

Macroeconomic Data
16%

GDP Composition

12%

16%

8%

4%
54%

30%
0%

-4%

Services

-8%

Industry

Agriculture

Source: The World Factbook, 2015 est.


-12%

Interest
Rate

Inflation

2014
Source: IHS Global Insight, November 2016
19

Unemployment

2015

2016F

GDP
Growth

India

Ag Economic Data

Annual industry tractor sales ~ 550,000 units


Average farm size ~ 1.2 hectares
Number of farms ~ 129 million

US$ Billions

Utilized agricultural area ~ 180 million hectares


Arable land ~ 157 million hectares

Crop Value of Production

$150
$120
$90
$60
$30
$0

2008

2011

2014

2017F

Includes corn, wheat, rice, barley, sorghum, oilseeds, peanut, sugar, cotton
Source: IHS Global Insight, November 2016

Share of the World Market

Source: FAO, Tractor Manufacturers Association of India, Indian Ministry of Agriculture


20

Production

Exports

Total Grains

10%

4%

Wheat

12%

1%

Corn

2%

1%

Rice

26%

27%

Cotton

25%

13%

Source: IHS Global Insight, November 2016; average 2014-2016

Construction & Forestry Fundamentals

21

U.S. Housing Starts


2.5

Millions of Units

2.0

1.5

1.0

0.5

0.0
1967

1972

1977

1982

1987

Multi-Family Housing Starts


Source: 19672015: U.S. Census Bureau, October 2016
2016F2017F: Deere & Company forecast as of 23 November 2016
22

1992

1997

2002

Single-Family Housing Starts

2007

2012

2017F

U.S. Construction Spending


60%
40%

$2,000

20%
0%

$1,600

-20%
-40%

$ Billions*

$1,200

-60%

% Total Construction Spend

$2,400

-80%

$800

-100%
-120%

$400

-140%
$0
1997

1999

2001

2003

2005

Government Infrastructure Investment


Nonresidential Investment in Structures
* 2009$ base
Source: 19972015: U.S. Bureau of Economic Analysis, October 2016
2016F2017F: Deere & Company forecast as of 23 November 2016
23

2007

2009

2011

2013

Government Investment in Structures


Residential Investment in Structures

2015

-160%
2017F

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