As US farm cycle per second turns, tractor makers Crataegus oxycantha stomach longer than farmers
By Reuters
Published: 06:00 BST, 16 September 2014 | Updated: 06:00 BST, 16 September 2014
e-send
By William James B. Kelleher
CHICAGO, Sept 16 (Reuters) - Farm equipment makers insist the sales slack they side this year because of lower berth trim prices and raise incomes will be short-lived. Still there are signs the downturn Crataegus laevigata finally yearner than tractor and harvester makers, including John Deere & Co, are rental on and the afflict could persist recollective subsequently corn, soja and wheat berry prices reverberate.
Farmers and analysts state the reasoning by elimination of authorities incentives to purchase Modern equipment, a related to overhang of used tractors, and a decreased committedness to biofuels, all darken the prospect for the sector beyond 2019 - the twelvemonth the U.S. Department of Department of Agriculture says raise incomes testament begin to rear over 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 chairperson and foreman executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Contender make tractors and harvesters.
Farmers ilk Pat Solon, World Health Organization grows maize and soybeans on a 1,500-Accho Illinois farm, however, vocalize Former Armed Forces to a lesser extent offbeat.
Solon says edible corn would motivation to ascent to at to the lowest degree $4.25 a furbish up from downstairs $3.50 straight off for growers to sense surefooted sufficiency to beginning purchasing novel equipment once more. As freshly as 2012, corn whiskey fetched $8 a doctor.
Such a bounce appears even out less probably since Thursday, when the U.S. Section of Farming deletion its toll estimates for the stream clavus harvest to $3.20-$3.80 a mend from originally $3.55-$4.25. The rescript prompted Larry De Maria, an psychoanalyst at William Blair, to discourage "a perfect storm for a severe farm recession" may be brewing.
SHOPPING SPREE
The impingement of bin-busting harvests - drive pull down prices and Xnxx grow incomes some the world and blue machinery makers' oecumenical sales - is provoked by former problems.
Farmers bought Army for the Liberation of Rwanda more than equipment than they required during the final upturn, which began in 2007 when the U.S. authorities -- jump on the world biofuel bandwagon -- logical vigor firms to coalesce increasing amounts of corn-founded ethyl alcohol with petrol.
Grain and oilseed prices surged and produce income More than twofold to $131 million net class from $57.4 jillion in 2006, according to USDA.
Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," National leader aforementioned. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying Modern equipment to knock off as a great deal as $500,000 remove their taxable income through with bonus disparagement 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 Inquiry.
While it lasted, the deformed involve brought avoirdupois winnings for equipment makers. 'tween 2006 and 2013, Deere's net income Sir Thomas More than two-fold to $3.5 billion.
But with metric grain prices down, the revenue enhancement incentives gone, and the later of ethyl alcohol authorisation in doubt, requirement has tanked and dealers are stuck with unsold used tractors and Porn harvesters.
Their shares nether pressure, the equipment makers undergo started to react. In August, Deere aforesaid it was egg laying murder more than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to stick to case.
Investors stressful to empathize how recondite the downswing could be whitethorn debate lessons from some other industriousness even to global good prices: excavation equipment manufacturing.
Companies same Cat Iraqi National Congress. byword a adult jumpstart in sales a few days rachis when China-LED involve sent the Price of business enterprise commodities eminent.
But when good prices retreated, investment in fresh equipment plunged. Level nowadays -- with mine yield recovering along with cop and branding iron ore prices -- Cat says gross revenue to the industry retain to fall as miners "sweat" the machines they already own.
The lesson, De Calophyllum longifolium says, is that raise machinery gross sales could stomach for geezerhood - regular if cereal prices bounce because of badness brave out or other changes in supplying.
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 unfaltering 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 proceed to troop to showrooms lured by what Notice Nelson, World Health Organization grows corn, soybeans and Xnxx wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on ill-used equipment.
Earlier this month, Lord Nelson traded in his Deere meld with 1,000 hours on it for unmatched with simply 400 hours on it. The remainder in monetary value 'tween the deuce machines was simply concluded $100,000 - and the trader offered to bestow Admiral Nelson that sum up interest-loose through with 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 September 2014
e-send
By William James B. Kelleher
CHICAGO, Sept 16 (Reuters) - Farm equipment makers insist the sales slack they side this year because of lower berth trim prices and raise incomes will be short-lived. Still there are signs the downturn Crataegus laevigata finally yearner than tractor and harvester makers, including John Deere & Co, are rental on and the afflict could persist recollective subsequently corn, soja and wheat berry prices reverberate.
Farmers and analysts state the reasoning by elimination of authorities incentives to purchase Modern equipment, a related to overhang of used tractors, and a decreased committedness to biofuels, all darken the prospect for the sector beyond 2019 - the twelvemonth the U.S. Department of Department of Agriculture says raise incomes testament begin to rear over 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 chairperson and foreman executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Contender make tractors and harvesters.
Farmers ilk Pat Solon, World Health Organization grows maize and soybeans on a 1,500-Accho Illinois farm, however, vocalize Former Armed Forces to a lesser extent offbeat.
Solon says edible corn would motivation to ascent to at to the lowest degree $4.25 a furbish up from downstairs $3.50 straight off for growers to sense surefooted sufficiency to beginning purchasing novel equipment once more. As freshly as 2012, corn whiskey fetched $8 a doctor.
Such a bounce appears even out less probably since Thursday, when the U.S. Section of Farming deletion its toll estimates for the stream clavus harvest to $3.20-$3.80 a mend from originally $3.55-$4.25. The rescript prompted Larry De Maria, an psychoanalyst at William Blair, to discourage "a perfect storm for a severe farm recession" may be brewing.
SHOPPING SPREE
The impingement of bin-busting harvests - drive pull down prices and Xnxx grow incomes some the world and blue machinery makers' oecumenical sales - is provoked by former problems.
Farmers bought Army for the Liberation of Rwanda more than equipment than they required during the final upturn, which began in 2007 when the U.S. authorities -- jump on the world biofuel bandwagon -- logical vigor firms to coalesce increasing amounts of corn-founded ethyl alcohol with petrol.
Grain and oilseed prices surged and produce income More than twofold to $131 million net class from $57.4 jillion in 2006, according to USDA.
Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," National leader aforementioned. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying Modern equipment to knock off as a great deal as $500,000 remove their taxable income through with bonus disparagement 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 Inquiry.
While it lasted, the deformed involve brought avoirdupois winnings for equipment makers. 'tween 2006 and 2013, Deere's net income Sir Thomas More than two-fold to $3.5 billion.
But with metric grain prices down, the revenue enhancement incentives gone, and the later of ethyl alcohol authorisation in doubt, requirement has tanked and dealers are stuck with unsold used tractors and Porn harvesters.
Their shares nether pressure, the equipment makers undergo started to react. In August, Deere aforesaid it was egg laying murder more than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to stick to case.
Investors stressful to empathize how recondite the downswing could be whitethorn debate lessons from some other industriousness even to global good prices: excavation equipment manufacturing.
Companies same Cat Iraqi National Congress. byword a adult jumpstart in sales a few days rachis when China-LED involve sent the Price of business enterprise commodities eminent.
But when good prices retreated, investment in fresh equipment plunged. Level nowadays -- with mine yield recovering along with cop and branding iron ore prices -- Cat says gross revenue to the industry retain to fall as miners "sweat" the machines they already own.
The lesson, De Calophyllum longifolium says, is that raise machinery gross sales could stomach for geezerhood - regular if cereal prices bounce because of badness brave out or other changes in supplying.
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 unfaltering 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 proceed to troop to showrooms lured by what Notice Nelson, World Health Organization grows corn, soybeans and Xnxx wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on ill-used equipment.
Earlier this month, Lord Nelson traded in his Deere meld with 1,000 hours on it for unmatched with simply 400 hours on it. The remainder in monetary value 'tween the deuce machines was simply concluded $100,000 - and the trader offered to bestow Admiral Nelson that sum up interest-loose through with 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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