John Deere reported strong quarterly earnings Friday. The maker of those iconic green and yellow tractors topped Wall Street profit expectations and raised its net income forecast for the rest of the year. 

And when the world’s largest farm equipment maker is doing so well, that gives people some clues about how the global farm economy at large is faring. 

When consumers invest in big-ticket items like cars, sofas and washing machines, they’re usually feeling optimistic about their finances. The same goes with farm equipment, said Daniel Sumner, an agricultural economist at the University of California, Davis. 

“When farmers have a little extra cash flow and they don’t see a crisis looming right now,” he said, that’s when they replace their tractor fleets. 

And when John Deere is moving a lot of machinery, Sumner said, that indicates growers of global commodity crops are doing well. 

“That is to say the corn, soybeans, wheat and rice,” he said. All of those were in extra high demand after Russia invaded Ukraine last year.

“That really took a lot of the productive capacity offline,” said Kristen Owen, executive director at Oppenheimer. She said when global supplies of grain and oil seeds were low, prices soared. Now, farmers can afford to make some investments. 

“When farmers make money, they tend to spend money,” she said.

But one strong earnings report from John Deere doesn’t mean everything is rosey for commodity farmers, according to Krista Swanson, lead economist for the National Corn Growers Association. 

“If we’re using that as a barometer for the farm economy, I view it as a lagging indicator,” she said. She added that commodity prices are moderating. Between that, higher borrowing costs and inflation hitting everything from seeds to fertilizer, farmers could be facing tight margins in 2023.