Deere & Co. raised its earnings guidance above analyst estimates as sustained high crop prices keep farmers spending, resulting in a record windfall for the top maker of agricultural machinery. Its shares rose.

A year after Russia’s invasion of Ukraine sent wheat futures to a record, Deere is betting crops will stay pricey, enabling farmers to absorb cost inflation and overhaul aging fleets. China’s reopening from the pandemic and a drought in Argentina are set to boost demand, with U.S. farmers remaining optimistic even as income moderates from record levels.

“Deere is looking forward to another strong year on the basis of positive fundamentals, low machine inventories, and a continuation of solid execution,” Chief Executive Officer John May said in Friday’s statement.

Deere’s shares rose 5.2 per cent to US$424.03 at 9:38 a.m. in New York, the best performer on the S&P 500 Index.

Last quarter’s sales and net income also came in ahead of expectations, with surging demand for farm equipment helping Deere put the fallout from a prolonged work stoppage into the rear-view mirror.

The increase in production for the quarter was “quite impressive and a clear sign that DE’s supply chain and operational bottlenecks have continued to improve,” Baird Equity Research said Friday in a note.

The agriculture industry has endured droughts in the U.S. and China as well as lingering pandemic supply-chain snarls exacerbated by the war in Ukraine. Still, demand for Deere’s iconic green tractors remains buoyant, with crop disruptions also helping keep prices of corn, soy and wheat high — and farm economies strong.

The world’s biggest tractor maker expects net income for fiscal 2023 of between US$8.75 billion and US$9.25 billion, it said in a statement. That compares with the average estimate of US$8.36 billion by 26 analysts. In November, Deere forecast fiscal 2023 net income of US$8 billion to US$8.5 billion.

Deere “benefited from ongoing demand strength, coupled with improved operating/supply chain conditions,” market insight company Vital Knowledge said.

Deere sees business in the U.S. and Canada’s large agriculture and turf segment up in 2023, but smaller agriculture down. Smaller scale farmers have struggled with rising costs of production as inflation hits everything from fertilizer to seeds to pesticides.

The company forecasts production and precision agriculture sales to rise about 20 per cent this year as farmers focus on wasting as little of their inputs as possible amid rising prices.