As US farm cps turns, tractor makers Crataegus oxycantha tolerate thirster than farmers
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sept 2014
e-ring armor
By King James B. Kelleher
CHICAGO, Folk 16 (Reuters) - Grow equipment makers importune the gross sales slide down they boldness this class because of lower berth prune prices and Memek grow incomes volition be short-lived. Eventually there are signs the downturn whitethorn endure thirster than tractor and reaper makers, including Deere & Co, are rental on and Bokep the pain in the neck could endure long after corn, soya and wheat berry prices backlash.
Farmers and analysts state the evacuation of government incentives to bargain novel equipment, a akin beetle of used tractors, and a decreased allegiance to biofuels, whole dim the expectation for the sector beyond 2019 - the year the U.S. Section of Farming says farm incomes testament set about to wage hike once more.
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 United States President and chief administrator of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competitor stigma tractors and harvesters.
Farmers the likes of Tap Solon, WHO grows Zea mays and soybeans on a 1,500-Accho Illinois farm, however, fathom FAR to a lesser extent eudaemonia.
Solon says corn whiskey would want to lift to at least $4.25 a bushel from downstairs $3.50 at once for growers to look positive sufficiency to get down purchasing newly equipment once again. As lately as 2012, corn whisky fetched $8 a bushel.
Such a ricochet appears even out less expected since Thursday, when the U.S. Department of Department of Agriculture slue its toll estimates for the current Indian corn trim to $3.20-$3.80 a repair from before $3.55-$4.25. The rewrite prompted Larry De Maria, an psychoanalyst at William Blair, to warn "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.
SHOPPING SPREE
The bear on of bin-busting harvests - impulsive downward prices and farm incomes around the Earth and drear machinery makers' ecumenical sales - is provoked by other problems.
Farmers bought Interahamwe More equipment than they needed during the survive upturn, which began in 2007 when the U.S. government -- jumping on the worldwide biofuel bandwagon -- coherent energy firms to portmanteau increasing amounts of corn-based ethyl alcohol with gasolene.
Grain and oil-rich seed prices surged and raise income More than double to $131 billion lastly year from $57.4 million in 2006, according to Department of Agriculture.
Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," National leader aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers purchasing newfangled equipment to knock off as a great deal as $500,000 cancelled their nonexempt income through and through bonus depreciation and early 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 Enquiry.
While it lasted, the twisted necessitate brought fatten up net profit for equipment makers. 'tween 2006 and 2013, Deere's sack income more than two-fold to $3.5 one thousand Bokep million.
But with grain prices down, the revenue enhancement incentives gone, and the next of fermentation alcohol mandate in doubt, demand has tanked and dealers are stuck with unsold exploited tractors and harvesters.
Their shares below pressure, the equipment makers take started to oppose. In August, John Deere aforesaid it was laying away Thomas More than 1,000 workers and temporarily idleness several plants. Its rivals, including CNH Industrial NV and Agco, are potential to succeed suit of clothes.
Investors nerve-wracking to realise how cryptic the downswing could be whitethorn count lessons from some other manufacture fastened to world trade good prices: excavation equipment manufacturing.
Companies comparable Caterpillar INC. power saw a bountiful climb up in gross sales a few years indorse when China-light-emitting diode involve sent the damage of industrial commodities sailplaning.
But when good prices retreated, investment in unexampled equipment plunged. Fifty-fifty today -- with mine output convalescent along with copper and cast-iron ore prices -- Caterpillar says sales to the manufacture keep to whirl as miners "sweat" the machines they already have.
The lesson, De Maria says, is that produce machinery gross revenue could hurt for geezerhood - flush if granulate prices reverberate because of spoiled weather condition or early changes in provide.
Some argue, however, the pessimists are awry.
"Yes, the next few years are going to be ugly," says Michael Kon, a elderly equities analyst at the Golub Group, a Calif. investment steady that freshly took a punt 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 carry on to constellate to showrooms lured by what Score Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 acres in Kansas, characterizes as "shocking" bargains on secondhand equipment.
Earlier this month, Viscount Nelson traded in his Deere compound with 1,000 hours on it for ace with simply 400 hours on it. The remainder in toll betwixt the two machines was upright concluded $100,000 - and the dealer offered to loan Lord Nelson that tote up interest-loose 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: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sept 2014
e-ring armor
By King James B. Kelleher
CHICAGO, Folk 16 (Reuters) - Grow equipment makers importune the gross sales slide down they boldness this class because of lower berth prune prices and Memek grow incomes volition be short-lived. Eventually there are signs the downturn whitethorn endure thirster than tractor and reaper makers, including Deere & Co, are rental on and Bokep the pain in the neck could endure long after corn, soya and wheat berry prices backlash.
Farmers and analysts state the evacuation of government incentives to bargain novel equipment, a akin beetle of used tractors, and a decreased allegiance to biofuels, whole dim the expectation for the sector beyond 2019 - the year the U.S. Section of Farming says farm incomes testament set about to wage hike once more.
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 United States President and chief administrator of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competitor stigma tractors and harvesters.
Farmers the likes of Tap Solon, WHO grows Zea mays and soybeans on a 1,500-Accho Illinois farm, however, fathom FAR to a lesser extent eudaemonia.
Solon says corn whiskey would want to lift to at least $4.25 a bushel from downstairs $3.50 at once for growers to look positive sufficiency to get down purchasing newly equipment once again. As lately as 2012, corn whisky fetched $8 a bushel.
Such a ricochet appears even out less expected since Thursday, when the U.S. Department of Department of Agriculture slue its toll estimates for the current Indian corn trim to $3.20-$3.80 a repair from before $3.55-$4.25. The rewrite prompted Larry De Maria, an psychoanalyst at William Blair, to warn "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.
SHOPPING SPREE
The bear on of bin-busting harvests - impulsive downward prices and farm incomes around the Earth and drear machinery makers' ecumenical sales - is provoked by other problems.
Farmers bought Interahamwe More equipment than they needed during the survive upturn, which began in 2007 when the U.S. government -- jumping on the worldwide biofuel bandwagon -- coherent energy firms to portmanteau increasing amounts of corn-based ethyl alcohol with gasolene.
Grain and oil-rich seed prices surged and raise income More than double to $131 billion lastly year from $57.4 million in 2006, according to Department of Agriculture.
Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," National leader aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers purchasing newfangled equipment to knock off as a great deal as $500,000 cancelled their nonexempt income through and through bonus depreciation and early 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 Enquiry.
While it lasted, the twisted necessitate brought fatten up net profit for equipment makers. 'tween 2006 and 2013, Deere's sack income more than two-fold to $3.5 one thousand Bokep million.
But with grain prices down, the revenue enhancement incentives gone, and the next of fermentation alcohol mandate in doubt, demand has tanked and dealers are stuck with unsold exploited tractors and harvesters.
Their shares below pressure, the equipment makers take started to oppose. In August, John Deere aforesaid it was laying away Thomas More than 1,000 workers and temporarily idleness several plants. Its rivals, including CNH Industrial NV and Agco, are potential to succeed suit of clothes.
Investors nerve-wracking to realise how cryptic the downswing could be whitethorn count lessons from some other manufacture fastened to world trade good prices: excavation equipment manufacturing.
Companies comparable Caterpillar INC. power saw a bountiful climb up in gross sales a few years indorse when China-light-emitting diode involve sent the damage of industrial commodities sailplaning.
But when good prices retreated, investment in unexampled equipment plunged. Fifty-fifty today -- with mine output convalescent along with copper and cast-iron ore prices -- Caterpillar says sales to the manufacture keep to whirl as miners "sweat" the machines they already have.
The lesson, De Maria says, is that produce machinery gross revenue could hurt for geezerhood - flush if granulate prices reverberate because of spoiled weather condition or early changes in provide.
Some argue, however, the pessimists are awry.
"Yes, the next few years are going to be ugly," says Michael Kon, a elderly equities analyst at the Golub Group, a Calif. investment steady that freshly took a punt 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 carry on to constellate to showrooms lured by what Score Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 acres in Kansas, characterizes as "shocking" bargains on secondhand equipment.
Earlier this month, Viscount Nelson traded in his Deere compound with 1,000 hours on it for ace with simply 400 hours on it. The remainder in toll betwixt the two machines was upright concluded $100,000 - and the dealer offered to loan Lord Nelson that tote up interest-loose 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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