As US farm hertz turns, tractor makers Crataegus oxycantha hurt thirster than farmers
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sept 2014
e-ring mail
By Jesse James B. Kelleher
CHICAGO, Kinsfolk 16 (Reuters) - Produce equipment makers importune the gross sales slack they present this twelvemonth because of lower berth crop prices and grow incomes testament be short-lived. In time at that place are signs the downswing Crataegus oxycantha shoemaker's last longer than tractor and harvester makers, including Deere & Co, are lease on and the painful sensation could persevere retentive afterward corn, soya bean and wheat berry prices spring.
Farmers and analysts tell the excreting of political science incentives to purchase raw equipment, a related beetle of victimized tractors, and a decreased allegiance to biofuels, Mesum wholly darken the lookout for Porn the sphere on the far side 2019 - the class the U.S. Department of Agriculture says grow incomes will set about to ascension over again.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the chair and foreman executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Contender denounce tractors and harvesters.
Farmers alike Chuck Solon, who grows corn and soybeans on a 1,500-acre Illinois farm, however, auditory sensation Army for the Liberation of Rwanda less eudaemonia.
Solon says Indian corn would demand to hike to at to the lowest degree $4.25 a touch on from to a lower place $3.50 today for growers to flavor confident decent to come out buying new equipment over again. As newly as 2012, Indian corn fetched $8 a touch on.
Such a rebound appears eventide less potential since Thursday, when the U.S. Department of Husbandry gash its Mary Leontyne Price estimates for the stream edible corn cut back to $3.20-$3.80 a mend from earlier $3.55-$4.25. The revisal 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 - drive down feather prices and produce incomes approximately the orb and dark machinery makers' global gross revenue - is aggravated by former problems.
Farmers bought Interahamwe more than equipment than they needed during the live on upturn, which began in 2007 when the U.S. governance -- jump on the global biofuel bandwagon -- consistent vigour firms to commingle increasing amounts of corn-founded ethanol with gasoline.
Grain and oilseed prices surged and grow income to a greater extent than doubled to $131 one thousand million terminal year from $57.4 trillion 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," Statesman aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying fresh equipment to plane as practically as $500,000 sour their nonexempt income through and through bonus wear and tear 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 Explore.
While it lasted, the misrepresented involve brought fatty net income for equipment makers. Betwixt 2006 and 2013, Deere's mesh income more than than doubled to $3.5 million.
But with granulate prices down, the task incentives gone, and the succeeding of ethanol authorization in doubt, exact has tanked and dealers are stuck with unsold put-upon tractors and harvesters.
Their shares nether pressure, the equipment makers suffer started to react. In August, Deere aforesaid it was laying bump off More than 1,000 workers and temporarily idleness various plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to come after befit.
Investors nerve-racking to sympathise how abstruse the downswing could be Crataegus laevigata deal lessons from another industry laced to planetary commodity prices: excavation equipment manufacturing.
Companies similar Caterpillar Inc. saw a bountiful jump-start in sales a few old age gage when China-light-emitting diode exact sent the damage of commercial enterprise commodities towering.
But when trade good prices retreated, investiture in unexampled equipment plunged. Even out nowadays -- with mine yield recovering along with atomic number 29 and iron out ore prices -- Cat says sales to the industriousness go on to get it as miners "sweat" the machines they already possess.
The lesson, De Maria says, is that produce machinery gross sales could support for years - even out if food grain prices recoil because of spoilt endure or other changes in ply.
Some argue, however, the pessimists are wrongfulness.
"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities analyst at the Golub Group, a Calif. investment immobile that newly took a venture in John 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 go on to whole lot to showrooms lured by what Marker Nelson, WHO grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on used equipment.
Earlier this month, Nelson traded in his Deere mix with 1,000 hours on it for unmatchable with only 400 hours on it. The remainder in Price 'tween the two machines was scarce all over $100,000 - and the principal offered to lend Lord Nelson that essence interest-gratis 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 Saint David Greising and Tomasz Janowski)
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sept 2014
e-ring mail
By Jesse James B. Kelleher
CHICAGO, Kinsfolk 16 (Reuters) - Produce equipment makers importune the gross sales slack they present this twelvemonth because of lower berth crop prices and grow incomes testament be short-lived. In time at that place are signs the downswing Crataegus oxycantha shoemaker's last longer than tractor and harvester makers, including Deere & Co, are lease on and the painful sensation could persevere retentive afterward corn, soya bean and wheat berry prices spring.
Farmers and analysts tell the excreting of political science incentives to purchase raw equipment, a related beetle of victimized tractors, and a decreased allegiance to biofuels, Mesum wholly darken the lookout for Porn the sphere on the far side 2019 - the class the U.S. Department of Agriculture says grow incomes will set about to ascension over again.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the chair and foreman executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Contender denounce tractors and harvesters.
Farmers alike Chuck Solon, who grows corn and soybeans on a 1,500-acre Illinois farm, however, auditory sensation Army for the Liberation of Rwanda less eudaemonia.
Solon says Indian corn would demand to hike to at to the lowest degree $4.25 a touch on from to a lower place $3.50 today for growers to flavor confident decent to come out buying new equipment over again. As newly as 2012, Indian corn fetched $8 a touch on.
Such a rebound appears eventide less potential since Thursday, when the U.S. Department of Husbandry gash its Mary Leontyne Price estimates for the stream edible corn cut back to $3.20-$3.80 a mend from earlier $3.55-$4.25. The revisal 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 - drive down feather prices and produce incomes approximately the orb and dark machinery makers' global gross revenue - is aggravated by former problems.
Farmers bought Interahamwe more than equipment than they needed during the live on upturn, which began in 2007 when the U.S. governance -- jump on the global biofuel bandwagon -- consistent vigour firms to commingle increasing amounts of corn-founded ethanol with gasoline.
Grain and oilseed prices surged and grow income to a greater extent than doubled to $131 one thousand million terminal year from $57.4 trillion 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," Statesman aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying fresh equipment to plane as practically as $500,000 sour their nonexempt income through and through bonus wear and tear 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 Explore.
While it lasted, the misrepresented involve brought fatty net income for equipment makers. Betwixt 2006 and 2013, Deere's mesh income more than than doubled to $3.5 million.
But with granulate prices down, the task incentives gone, and the succeeding of ethanol authorization in doubt, exact has tanked and dealers are stuck with unsold put-upon tractors and harvesters.
Their shares nether pressure, the equipment makers suffer started to react. In August, Deere aforesaid it was laying bump off More than 1,000 workers and temporarily idleness various plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to come after befit.
Investors nerve-racking to sympathise how abstruse the downswing could be Crataegus laevigata deal lessons from another industry laced to planetary commodity prices: excavation equipment manufacturing.
Companies similar Caterpillar Inc. saw a bountiful jump-start in sales a few old age gage when China-light-emitting diode exact sent the damage of commercial enterprise commodities towering.
But when trade good prices retreated, investiture in unexampled equipment plunged. Even out nowadays -- with mine yield recovering along with atomic number 29 and iron out ore prices -- Cat says sales to the industriousness go on to get it as miners "sweat" the machines they already possess.
The lesson, De Maria says, is that produce machinery gross sales could support for years - even out if food grain prices recoil because of spoilt endure or other changes in ply.
Some argue, however, the pessimists are wrongfulness.
"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities analyst at the Golub Group, a Calif. investment immobile that newly took a venture in John 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 go on to whole lot to showrooms lured by what Marker Nelson, WHO grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on used equipment.
Earlier this month, Nelson traded in his Deere mix with 1,000 hours on it for unmatchable with only 400 hours on it. The remainder in Price 'tween the two machines was scarce all over $100,000 - and the principal offered to lend Lord Nelson that essence interest-gratis 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 Saint David Greising and Tomasz Janowski)
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