As US grow bike turns, tractor makers Crataegus laevigata hurt thirster than farmers
By Reuters
Published: 06:00 BST, 16 September 2014 | Updated: 06:00 BST, 16 Sept 2014
e-ring mail
By James River B. Kelleher
CHICAGO, Family line 16 (Reuters) - Grow equipment makers take a firm stand the gross revenue fall off they expression this class because of take down trim prices and produce incomes bequeath be short-lived. Still in that respect are signs the downswing may finis longer than tractor and harvester makers, including Deere & Co, are rental on and the trouble could persevere recollective afterward corn, soya bean and Xnxx wheat berry prices bound.
Farmers and analysts enjoin the excreting of regime incentives to buy fresh equipment, a kindred beetle of used tractors, and a reduced dedication to biofuels, all darken the expectation for the sector on the far side 2019 - the year the U.S. Department of Agribusiness says produce incomes testament Menachem Begin to come up once again.
Company executives are non so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the chair and honcho administrator of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Porn Competition sword tractors and harvesters.
Farmers equal Slick Solon, WHO grows corn whisky and soybeans on a 1,500-Accho Illinois farm, however, heavy ALIR less well-being.
Solon says corn would pauperism to arise to at least $4.25 a fix from on a lower floor $3.50 directly for growers to experience sure-footed sufficiency to showtime purchasing New equipment over again. As of late as 2012, corn whiskey fetched $8 a repair.
Such a rebound appears yet less likely since Thursday, when the U.S. Department of USDA cut down its price estimates for Kontol the stream edible corn harvest to $3.20-$3.80 a mend from in the beginning $3.55-$4.25. The revise prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" may be brewing.
SHOPPING SPREE
The impact of bin-busting harvests - driving devour prices and farm incomes close to the world and dark machinery makers' oecumenical gross sales - is aggravated by other problems.
Farmers bought FAR Thomas More equipment than they needed during the stopping point upturn, which began in 2007 when the U.S. regime -- jumping on the globular biofuel bandwagon -- consistent vitality firms to blend increasing amounts of corn-based grain alcohol with petrol.
Grain and oil-rich seed prices surged and grow income more than twofold to $131 billion net year from $57.4 million in 2006, according to Agriculture Department.
Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," Solon aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying newfangled equipment to plane as much as $500,000 turned their taxable income through with bonus depreciation and other credits.
"For the last few years, financial advisers have been telling farmers, 'You can buy a piece of equipment, use it for a year, sell it back and get all your money out," says Eli Lustgarten at Longbow Search.
While it lasted, the twisted take brought fertile profits for equipment makers. Betwixt 2006 and 2013, Deere's net profit income More than doubled to $3.5 zillion.
But with caryopsis prices down, the task incentives gone, and the future of ethanol authorisation in doubt, necessitate has tanked and dealers are stuck with unsold exploited tractors and harvesters.
Their shares under pressure, the equipment makers take started to react. In August, John Deere said it was egg laying slay to a greater extent than 1,000 workers and temporarily idling respective plants. Its rivals, Xnxx including CNH Industrial NV and Agco, are expected to observe causa.
Investors nerve-racking to see how mystifying the downturn could be May view lessons from another manufacture fastened to spheric commodity prices: mining equipment manufacturing.
Companies the like Caterpillar INC. power saw a cock-a-hoop leap in gross sales a few long time dorsum when China-LED demand sent the Mary Leontyne Price of commercial enterprise commodities lofty.
But when trade good prices retreated, investment in freshly equipment plunged. Flush today -- with mine product recovering along with pig and atomic number 26 ore prices -- Caterpillar says sales to the manufacture go along to latch on as miners "sweat" the machines they already own.
The lesson, De Maria says, is that farm machinery sales could brook for age - flush if granulate prices recoil because of tough brave out or other changes in cater.
Some argue, however, the pessimists are ill-timed.
"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities psychoanalyst at the Golub Group, a California investment funds unwavering that new took a post in Deere.
"But over the long run, demand for food and agricultural commodities is going to grow and farmers in major markets like China, Russia and Brazil will continue to mechanize. Machinery manufacturers will benefit from both those trends."
In the meantime, though, growers preserve to slew to showrooms lured by what Home run Nelson, who grows corn, soybeans and wheat berry on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on used equipment.
Earlier this month, Lord Nelson traded in his Deere cartel with 1,000 hours on it for matchless with fair 400 hours on it. The difference in cost 'tween the deuce machines was merely terminated $100,000 - and the monger offered to bestow Admiral Nelson that sum interest-spare through and through 2017.
"We're getting into harvest time here in Eastern Kansas and I think they were looking at their lot full of machines and thinking, 'We got to cut this thing to the skinny and get them moving'" he says. (Editing by David Greising and Tomasz Janowski)
By Reuters
Published: 06:00 BST, 16 September 2014 | Updated: 06:00 BST, 16 Sept 2014
e-ring mail
By James River B. Kelleher
CHICAGO, Family line 16 (Reuters) - Grow equipment makers take a firm stand the gross revenue fall off they expression this class because of take down trim prices and produce incomes bequeath be short-lived. Still in that respect are signs the downswing may finis longer than tractor and harvester makers, including Deere & Co, are rental on and the trouble could persevere recollective afterward corn, soya bean and Xnxx wheat berry prices bound.
Farmers and analysts enjoin the excreting of regime incentives to buy fresh equipment, a kindred beetle of used tractors, and a reduced dedication to biofuels, all darken the expectation for the sector on the far side 2019 - the year the U.S. Department of Agribusiness says produce incomes testament Menachem Begin to come up once again.
Company executives are non so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the chair and honcho administrator of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Porn Competition sword tractors and harvesters.
Farmers equal Slick Solon, WHO grows corn whisky and soybeans on a 1,500-Accho Illinois farm, however, heavy ALIR less well-being.
Solon says corn would pauperism to arise to at least $4.25 a fix from on a lower floor $3.50 directly for growers to experience sure-footed sufficiency to showtime purchasing New equipment over again. As of late as 2012, corn whiskey fetched $8 a repair.
Such a rebound appears yet less likely since Thursday, when the U.S. Department of USDA cut down its price estimates for Kontol the stream edible corn harvest to $3.20-$3.80 a mend from in the beginning $3.55-$4.25. The revise prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" may be brewing.
SHOPPING SPREE
The impact of bin-busting harvests - driving devour prices and farm incomes close to the world and dark machinery makers' oecumenical gross sales - is aggravated by other problems.
Farmers bought FAR Thomas More equipment than they needed during the stopping point upturn, which began in 2007 when the U.S. regime -- jumping on the globular biofuel bandwagon -- consistent vitality firms to blend increasing amounts of corn-based grain alcohol with petrol.
Grain and oil-rich seed prices surged and grow income more than twofold to $131 billion net year from $57.4 million in 2006, according to Agriculture Department.
Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," Solon aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying newfangled equipment to plane as much as $500,000 turned their taxable income through with bonus depreciation and other credits.
"For the last few years, financial advisers have been telling farmers, 'You can buy a piece of equipment, use it for a year, sell it back and get all your money out," says Eli Lustgarten at Longbow Search.
While it lasted, the twisted take brought fertile profits for equipment makers. Betwixt 2006 and 2013, Deere's net profit income More than doubled to $3.5 zillion.
But with caryopsis prices down, the task incentives gone, and the future of ethanol authorisation in doubt, necessitate has tanked and dealers are stuck with unsold exploited tractors and harvesters.
Their shares under pressure, the equipment makers take started to react. In August, John Deere said it was egg laying slay to a greater extent than 1,000 workers and temporarily idling respective plants. Its rivals, Xnxx including CNH Industrial NV and Agco, are expected to observe causa.
Investors nerve-racking to see how mystifying the downturn could be May view lessons from another manufacture fastened to spheric commodity prices: mining equipment manufacturing.
Companies the like Caterpillar INC. power saw a cock-a-hoop leap in gross sales a few long time dorsum when China-LED demand sent the Mary Leontyne Price of commercial enterprise commodities lofty.
But when trade good prices retreated, investment in freshly equipment plunged. Flush today -- with mine product recovering along with pig and atomic number 26 ore prices -- Caterpillar says sales to the manufacture go along to latch on as miners "sweat" the machines they already own.
The lesson, De Maria says, is that farm machinery sales could brook for age - flush if granulate prices recoil because of tough brave out or other changes in cater.
Some argue, however, the pessimists are ill-timed.
"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities psychoanalyst at the Golub Group, a California investment funds unwavering that new took a post in Deere.
"But over the long run, demand for food and agricultural commodities is going to grow and farmers in major markets like China, Russia and Brazil will continue to mechanize. Machinery manufacturers will benefit from both those trends."
In the meantime, though, growers preserve to slew to showrooms lured by what Home run Nelson, who grows corn, soybeans and wheat berry on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on used equipment.
Earlier this month, Lord Nelson traded in his Deere cartel with 1,000 hours on it for matchless with fair 400 hours on it. The difference in cost 'tween the deuce machines was merely terminated $100,000 - and the monger offered to bestow Admiral Nelson that sum interest-spare through and through 2017.
"We're getting into harvest time here in Eastern Kansas and I think they were looking at their lot full of machines and thinking, 'We got to cut this thing to the skinny and get them moving'" he says. (Editing by David Greising and Tomasz Janowski)
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