Next Friday (20 May) sees the much-anticipated release of second quarter earnings from iconic US tractor maker Deere & Co (DE:NYSE).

After a strong first quarter to the end of January, when the firm beat estimates for both revenue and earnings by some margin and chief executive John C. May raised full year profit guidance, it’s fair to say expectations are high.

In its latest quarterly report, rival farm equipment-maker CNH Industrial (CNHI:NYSE) soundly beat earnings forecasts for the three months to March thanks to ‘exceptionally strong’ order books in agriculture and construction.

Reduced crop supplies due to shortages in Canada and Latin America combined with the conflict in Ukraine and sanctions on Russia mean global grain markets will remain tight potentially beyond the end of this year, keeping prices high.

This in turn offers an incentive for farmers elsewhere to invest in the latest farm tools and machinery to boost the yield on their crops.

CNH chief executive Scott Wine said the firm was managing the supply chain crisis and increasing customer deliveries, but at the same time he cautioned investors: ‘Don’t underestimate how difficult the environment is, it’s a battle.’

The firm also took a $71 million hit for the closure of its Russian operations, while Deere has yet to disclose the extent of lost sales due to the conflict in Ukraine.

In one incident, Russian troops attempted to steal $5 million worth of tractors from a dealership in Ukraine only to find they were remotely disabled by employees in Illinois.

The agriculture and agrochemical sub-sectors of the market have been outperforming since hostilities started and sanctions were imposed as Russia is a major supplier of potash, a key feedstock for fertilisers.

This has sent the global price of fertiliser – and companies which make it, such as CF Industries (CF:NYSE) and Mosaic (MOS:NYSE) in the US and K+S (SDF:ETR) in Germany – soaring in the past eight weeks, although much of their gains have been reversed in recent days.

Even fairly obscure firms like Harvest Minerals (HMI:AIM), which mines volcanic rock in the Minas Gerais area of Brazil and mills it to make fertiliser, have seen their shares rocket this year as demand has soared.

Shares in US food processing and commodities-trading giant Archer-Daniels-Midland (ADM:NYSE) have risen more than a quarter this year due to ‘robust and resilient’ demand for grains in particular.

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