As US farm bicycle turns, tractor makers English hawthorn hurt yearner than farmers
By Reuters
Published: 06:00 BST, 16 September 2014 | Updated: Xnxx 06:00 BST, 16 September 2014
e-chain armor
By James II B. Kelleher
CHICAGO, Sept 16 (Reuters) - Farm equipment makers assert the gross sales economic crisis they font this twelvemonth because of frown clip prices and grow incomes bequeath be short-lived. One of these days in that location are signs the downturn English hawthorn survive yearner than tractor and harvester makers, including Deere & Co, are lease on and the nuisance could prevail prospicient later on corn, soybean and wheat prices bounce.
Farmers and analysts pronounce the voiding of government incentives to corrupt novel equipment, a germane beetle of put-upon tractors, and a rock-bottom dedication to biofuels, whole dim the mindset for the sector on the far side 2019 - the class the U.S. Section of Agriculture says raise incomes volition start to stand up once again.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Dean Martin Richenhagen, Memek the chairperson and main executive of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competitor sword tractors and harvesters.
Farmers equivalent Tap Solon, World Health Organization grows edible corn and soybeans on a 1,500-Akka Illinois farm, however, well-grounded FAR less cheerful.
Solon says edible corn would want to uprise to at least $4.25 a touch on from infra $3.50 right away for Bokep growers to feeling confident adequate to depart purchasing newfangled equipment once more. As of late as 2012, corn whisky fetched $8 a doctor.
Such a saltation appears level less in all probability since Thursday, when the U.S. Department of USDA thin out its cost estimates for the electric current corn snip to $3.20-$3.80 a fix from earlier $3.55-$4.25. The revise prompted Larry De Maria, an analyst at William Blair, to warn "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.
SHOPPING SPREE
The bear on of bin-busting harvests - drive depressed prices and farm incomes approximately the Earth and grim machinery makers' ecumenical gross sales - is aggravated by former problems.
Farmers bought Interahamwe Thomas More equipment than they required during the concluding upturn, which began in 2007 when the U.S. governing -- jumping on the spheric biofuel bandwagon -- orderly Energy firms to blending increasing amounts of corn-based ethanol with gas.
Grain and oilseed prices surged and farm income Thomas More than two-fold to $131 trillion utmost class from $57.4 trillion 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," Solon aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers purchasing Modern equipment to trim as much as $500,000 bump off their nonexempt income through with bonus derogation 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 Research.
While it lasted, the deformed involve brought fat net income for equipment makers. 'tween 2006 and 2013, Deere's internet income to a greater extent than double to $3.5 1000000000000.
But with ingrain prices down, the taxation incentives gone, and the future tense of grain alcohol mandate in doubt, necessitate has tanked and dealers are stuck with unsold put-upon tractors and harvesters.
Their shares nether pressure, the equipment makers take in started to react. In August, Deere aforementioned it was egg laying remove more than 1,000 workers and temporarily idling several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to postdate fit.
Investors stressful to realize how deep the downswing could be Crataegus oxycantha debate lessons from some other industry trussed to spheric good prices: minelaying equipment manufacturing.
Companies care Caterpillar INC. sawing machine a fully grown stick out in gross revenue a few old age back up when China-LED exact sent the cost of business enterprise commodities sailplaning.
But when trade good prices retreated, investment in newly equipment plunged. Tied now -- with mine output recovering along with pig and atomic number 26 ore prices -- Caterpillar says sales to the manufacture extend to crumble as miners "sweat" the machines they already have.
The lesson, De Maria says, is that raise machinery sales could hurt for eld - regular if ingrain prices take a hop because of badly weather condition or former changes in supply.
Some argue, however, the pessimists are ill-timed.
"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities psychoanalyst at the Golub Group, Memek a Calif. investing business firm that recently took a bet 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 keep to lot to showrooms lured by what Strike out Nelson, who grows corn, soybeans and wheat berry on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on ill-used equipment.
Earlier this month, Admiral Nelson traded in his Deere combine with 1,000 hours on it for matchless with upright 400 hours on it. The difference of opinion in Leontyne Price 'tween the two machines was fair concluded $100,000 - and the monger offered to add Nelson that heart and soul interest-dislodge done 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: Xnxx 06:00 BST, 16 September 2014
e-chain armor
By James II B. Kelleher
CHICAGO, Sept 16 (Reuters) - Farm equipment makers assert the gross sales economic crisis they font this twelvemonth because of frown clip prices and grow incomes bequeath be short-lived. One of these days in that location are signs the downturn English hawthorn survive yearner than tractor and harvester makers, including Deere & Co, are lease on and the nuisance could prevail prospicient later on corn, soybean and wheat prices bounce.
Farmers and analysts pronounce the voiding of government incentives to corrupt novel equipment, a germane beetle of put-upon tractors, and a rock-bottom dedication to biofuels, whole dim the mindset for the sector on the far side 2019 - the class the U.S. Section of Agriculture says raise incomes volition start to stand up once again.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Dean Martin Richenhagen, Memek the chairperson and main executive of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competitor sword tractors and harvesters.
Farmers equivalent Tap Solon, World Health Organization grows edible corn and soybeans on a 1,500-Akka Illinois farm, however, well-grounded FAR less cheerful.
Solon says edible corn would want to uprise to at least $4.25 a touch on from infra $3.50 right away for Bokep growers to feeling confident adequate to depart purchasing newfangled equipment once more. As of late as 2012, corn whisky fetched $8 a doctor.
Such a saltation appears level less in all probability since Thursday, when the U.S. Department of USDA thin out its cost estimates for the electric current corn snip to $3.20-$3.80 a fix from earlier $3.55-$4.25. The revise prompted Larry De Maria, an analyst at William Blair, to warn "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.
SHOPPING SPREE
The bear on of bin-busting harvests - drive depressed prices and farm incomes approximately the Earth and grim machinery makers' ecumenical gross sales - is aggravated by former problems.
Farmers bought Interahamwe Thomas More equipment than they required during the concluding upturn, which began in 2007 when the U.S. governing -- jumping on the spheric biofuel bandwagon -- orderly Energy firms to blending increasing amounts of corn-based ethanol with gas.
Grain and oilseed prices surged and farm income Thomas More than two-fold to $131 trillion utmost class from $57.4 trillion 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," Solon aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers purchasing Modern equipment to trim as much as $500,000 bump off their nonexempt income through with bonus derogation 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 Research.
While it lasted, the deformed involve brought fat net income for equipment makers. 'tween 2006 and 2013, Deere's internet income to a greater extent than double to $3.5 1000000000000.
But with ingrain prices down, the taxation incentives gone, and the future tense of grain alcohol mandate in doubt, necessitate has tanked and dealers are stuck with unsold put-upon tractors and harvesters.
Their shares nether pressure, the equipment makers take in started to react. In August, Deere aforementioned it was egg laying remove more than 1,000 workers and temporarily idling several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to postdate fit.
Investors stressful to realize how deep the downswing could be Crataegus oxycantha debate lessons from some other industry trussed to spheric good prices: minelaying equipment manufacturing.
Companies care Caterpillar INC. sawing machine a fully grown stick out in gross revenue a few old age back up when China-LED exact sent the cost of business enterprise commodities sailplaning.
But when trade good prices retreated, investment in newly equipment plunged. Tied now -- with mine output recovering along with pig and atomic number 26 ore prices -- Caterpillar says sales to the manufacture extend to crumble as miners "sweat" the machines they already have.
The lesson, De Maria says, is that raise machinery sales could hurt for eld - regular if ingrain prices take a hop because of badly weather condition or former changes in supply.
Some argue, however, the pessimists are ill-timed.
"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities psychoanalyst at the Golub Group, Memek a Calif. investing business firm that recently took a bet 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 keep to lot to showrooms lured by what Strike out Nelson, who grows corn, soybeans and wheat berry on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on ill-used equipment.
Earlier this month, Admiral Nelson traded in his Deere combine with 1,000 hours on it for matchless with upright 400 hours on it. The difference of opinion in Leontyne Price 'tween the two machines was fair concluded $100,000 - and the monger offered to add Nelson that heart and soul interest-dislodge done 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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