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Aging US, Canada machinery boost AGI's sales

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Ag Growth International forecast robust sales in 2017, as farmers in the US and Canada replace aging equipment.

During midday trade in Toronto, AGI shares traded up 8.5% to Can$51 per share.

The company, which deal primarily in the sales of portable grain handling equipment and storage, reported sales of Can$163.0m in the July-to-September period, compared with Can$123.6m in the same period a year ago.

Earnings per share were in July to September came in at Can$1.07, compared with Can$0.57 a year ago.

'Large crops'

The USDA's Wasde report yesterday increased its 2016-17 projection of wheat supply in the US to 62.9m tonnes, compared with 56.12m tonnes last year.

It also forecast higher production in Canada at 31.5m tonnes, compared with 27.6m tonnes a year earlier.

Large crops and wet harvest conditions in Canada and the US had increased the wear and tear on existing equipment. This was supportive of in-season sales and future replacement sales, the company said.

The primary demand driver for portable handling equipment is the amount of grain handled, as this dictates farmer capacity requirements and the product replacement cycle.

In Canada, these factors combined with positive farmer sentiment have resulted in higher sales of portable equipment," it said.

'Cautious buying behaviour'

Negative farmer sentiment, however, continued to dampen sales in the US, where the company reported "very cautious buying behaviour".

"Sales of replacement parts in the US are well above prior year levels which appears to indicate end-users are managing with existing equipment and deferring new equipment purchases to future quarters," AGI said.

By Tanya Ashreena

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