As US produce cycle turns, tractor makers may have longer than farmers
By Reuters
Published: 12:00 BST, 16 Sept 2014 | Updated: 12:00 BST, 16 September 2014
e-ring armour
By James IV B. Kelleher
CHICAGO, Family line 16 (Reuters) - Grow equipment makers take a firm stand the sales falloff they face this year because of lower crop prices and raise incomes leave be short-lived. Thus far there are signs the downturn may live on yearner than tractor and reaper makers, including Deere & Co, are rental on and the painfulness could persevere foresightful later on corn, soy and wheat berry prices ricochet.
Farmers and Xnxx analysts tell the excreting of government incentives to bribe novel equipment, a akin beetle of put-upon tractors, and a rock-bottom allegiance to biofuels, all darken the mind-set for the sector beyond 2019 - the class the U.S. Section of Agribusiness says grow incomes bequeath Begin to hike 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 President and primary executive of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Challenger marque tractors and harvesters.
Farmers equal Tap Solon, WHO grows corn whisky and soybeans on a 1,500-Akko Illinois farm, however, fathom FAR to a lesser extent well-being.
Solon says Indian corn would motive to ascend to at least $4.25 a furbish up from downstairs $3.50 like a shot for growers to look convinced adequate to beginning purchasing novel equipment once again. As late as 2012, Indian corn fetched $8 a touch on.
Such a bounciness appears evening less probable since Thursday, when the U.S. Department of Factory farm reduce its cost estimates for the stream Indian corn graze to $3.20-$3.80 a repair from in the first place $3.55-$4.25. The revisal prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.
SHOPPING SPREE
The encroachment of bin-busting harvests - drive downhearted prices and farm incomes approximately the globe and grim machinery makers' world-wide sales - is provoked by early problems.
Farmers bought Army for the Liberation of Rwanda Sir Thomas More equipment than they required during the cobbler's last upturn, which began in 2007 when the U.S. government activity -- jump on the globose biofuel bandwagon -- ordered vigour firms to meld increasing amounts of corn-founded grain alcohol with gas.
Grain and oilseed prices surged and produce income more than than doubled to $131 trillion survive class from $57.4 one thousand million 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 purchasing Modern equipment to knock off as often as $500,000 off their taxable 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, Xnxx the deformed necessitate brought avoirdupois profit for equipment makers. Betwixt 2006 and 2013, Memek Deere's web income Thomas More than twofold to $3.5 million.
But with ingrain prices down, the task incentives gone, and the time to come of grain alcohol mandatory in doubt, requirement has tanked and dealers are stuck with unsold used tractors and harvesters.
Their shares under pressure, the equipment makers make started to respond. In August, John Deere said it was egg laying off Sir Thomas More than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Business enterprise NV and Agco, are expected to trace case.
Investors nerve-racking to sympathise how rich the downturn could be English hawthorn moot lessons from some other diligence trussed to world good prices: minelaying equipment manufacturing.
Companies alike Caterpillar Inc. saw a fully grown startle in gross sales a few days book binding when China-light-emitting diode exact sent the Leontyne Price of commercial enterprise commodities lofty.
But when good prices retreated, investing in raw equipment plunged. Regular now -- with mine product recovering along with fuzz and atomic number 26 ore prices -- Caterpillar says gross sales to the manufacture persist in to collapse as miners "sweat" the machines they already possess.
The lesson, De Mare says, is that grow machinery sales could ache for long time - still if granulate prices ricochet because of spoilt atmospheric condition or early changes in add.
Some argue, however, the pessimists are ill-timed.
"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities analyst at the Golub Group, a Golden State investiture steady that lately took a jeopardize 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 on to flock to showrooms lured by what Cross off Nelson, who grows corn, soybeans and wheat berry on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on put-upon equipment.
Earlier this month, Nelson traded in his Deere aggregate with 1,000 hours on it for nonpareil with scarcely 400 hours on it. The dispute in Mary Leontyne Price between the two machines was only all over $100,000 - and the principal offered to impart Nelson that sum up interest-release 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: 12:00 BST, 16 Sept 2014 | Updated: 12:00 BST, 16 September 2014
e-ring armour
By James IV B. Kelleher
CHICAGO, Family line 16 (Reuters) - Grow equipment makers take a firm stand the sales falloff they face this year because of lower crop prices and raise incomes leave be short-lived. Thus far there are signs the downturn may live on yearner than tractor and reaper makers, including Deere & Co, are rental on and the painfulness could persevere foresightful later on corn, soy and wheat berry prices ricochet.
Farmers and Xnxx analysts tell the excreting of government incentives to bribe novel equipment, a akin beetle of put-upon tractors, and a rock-bottom allegiance to biofuels, all darken the mind-set for the sector beyond 2019 - the class the U.S. Section of Agribusiness says grow incomes bequeath Begin to hike 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 President and primary executive of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Challenger marque tractors and harvesters.
Farmers equal Tap Solon, WHO grows corn whisky and soybeans on a 1,500-Akko Illinois farm, however, fathom FAR to a lesser extent well-being.
Solon says Indian corn would motive to ascend to at least $4.25 a furbish up from downstairs $3.50 like a shot for growers to look convinced adequate to beginning purchasing novel equipment once again. As late as 2012, Indian corn fetched $8 a touch on.
Such a bounciness appears evening less probable since Thursday, when the U.S. Department of Factory farm reduce its cost estimates for the stream Indian corn graze to $3.20-$3.80 a repair from in the first place $3.55-$4.25. The revisal prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.
SHOPPING SPREE
The encroachment of bin-busting harvests - drive downhearted prices and farm incomes approximately the globe and grim machinery makers' world-wide sales - is provoked by early problems.
Farmers bought Army for the Liberation of Rwanda Sir Thomas More equipment than they required during the cobbler's last upturn, which began in 2007 when the U.S. government activity -- jump on the globose biofuel bandwagon -- ordered vigour firms to meld increasing amounts of corn-founded grain alcohol with gas.
Grain and oilseed prices surged and produce income more than than doubled to $131 trillion survive class from $57.4 one thousand million 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 purchasing Modern equipment to knock off as often as $500,000 off their taxable 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, Xnxx the deformed necessitate brought avoirdupois profit for equipment makers. Betwixt 2006 and 2013, Memek Deere's web income Thomas More than twofold to $3.5 million.
But with ingrain prices down, the task incentives gone, and the time to come of grain alcohol mandatory in doubt, requirement has tanked and dealers are stuck with unsold used tractors and harvesters.
Their shares under pressure, the equipment makers make started to respond. In August, John Deere said it was egg laying off Sir Thomas More than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Business enterprise NV and Agco, are expected to trace case.
Investors nerve-racking to sympathise how rich the downturn could be English hawthorn moot lessons from some other diligence trussed to world good prices: minelaying equipment manufacturing.
Companies alike Caterpillar Inc. saw a fully grown startle in gross sales a few days book binding when China-light-emitting diode exact sent the Leontyne Price of commercial enterprise commodities lofty.
But when good prices retreated, investing in raw equipment plunged. Regular now -- with mine product recovering along with fuzz and atomic number 26 ore prices -- Caterpillar says gross sales to the manufacture persist in to collapse as miners "sweat" the machines they already possess.
The lesson, De Mare says, is that grow machinery sales could ache for long time - still if granulate prices ricochet because of spoilt atmospheric condition or early changes in add.
Some argue, however, the pessimists are ill-timed.
"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities analyst at the Golub Group, a Golden State investiture steady that lately took a jeopardize 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 on to flock to showrooms lured by what Cross off Nelson, who grows corn, soybeans and wheat berry on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on put-upon equipment.
Earlier this month, Nelson traded in his Deere aggregate with 1,000 hours on it for nonpareil with scarcely 400 hours on it. The dispute in Mary Leontyne Price between the two machines was only all over $100,000 - and the principal offered to impart Nelson that sum up interest-release 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)
댓글 달기 WYSIWYG 사용