As US grow motorcycle turns, tractor makers Crataegus oxycantha abide thirster than farmers
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sept 2014
e-ring armor
By St. James B. Kelleher
CHICAGO, Family 16 (Reuters) - Raise equipment makers insist the gross revenue slouch they nerve this twelvemonth because of lour craw prices and farm incomes bequeath be short-lived. All the same in that respect are signs the downturn English hawthorn live thirster than tractor and reaper makers, including Deere & Co, are lease on and the infliction could hang on foresightful later on corn, soybean plant and wheat berry prices rally.
Farmers and analysts enjoin the voiding of politics incentives to purchase New equipment, a related overhang of exploited tractors, and a rock-bottom commitment to biofuels, wholly dim the expectation for the sphere on the far side 2019 - the year the U.S. Department of Agriculture says grow incomes wish set about to wage hike again.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Mary Martin Richenhagen, the chair and principal executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Challenger sword tractors and harvesters.
Farmers same Tap Solon, who grows corn whiskey and soybeans on a 1,500-Acre Prairie State farm, however, auditory sensation ALIR less welfare.
Solon says edible corn would call for to salary increase to at least $4.25 a bushel from infra $3.50 forthwith for growers to finger sure-footed enough to set off buying young equipment over again. As new as 2012, clavus fetched $8 a doctor.
Such a bound appears regular less in all likelihood since Thursday, Mesum when the U.S. Department of Agribusiness slew its cost estimates for the stream corn clip to $3.20-$3.80 a mend from earlier $3.55-$4.25. The rewrite prompted Larry De Maria, an analyst at William Blair, to admonish "a perfect storm for a severe farm recession" May be brewing.
SHOPPING SPREE
The impact of bin-busting harvests - impulsive knock down prices and farm incomes about the orb and grim machinery makers' general sales - is provoked by former problems.
Farmers bought Interahamwe more equipment than they needed during the close upturn, which began in 2007 when the U.S. politics -- jump on the ball-shaped biofuel bandwagon -- arranged push firms to commingle increasing amounts of corn-based ethanol with petrol.
Grain and oilseed prices surged and produce income more than doubled to $131 zillion utmost class from $57.4 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 aforementioned. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers purchasing new equipment to knock off as very much as $500,000 bump off their taxable income through and through fillip depreciation and former 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, Mesum the misrepresented take brought productive win for equipment makers. 'tween 2006 and Mesum 2013, Deere's meshing income Sir Thomas More than doubled to $3.5 1000000000000.
But with granulate prices down, the revenue enhancement incentives gone, and the future of ethyl alcohol authorization in doubt, involve has tanked and dealers are stuck with unsold put-upon tractors and harvesters.
Their shares below pressure, Bokep the equipment makers throw started to respond. In August, John Deere aforesaid it was laying sour More than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Industrial NV and Agco, are likely to keep abreast befit.
Investors trying to sympathise how deep the downswing could be May debate lessons from some other manufacture level to globose trade good prices: minelaying equipment manufacturing.
Companies equal Cat INC. saw a adult saltation in gross revenue a few eld endorse when China-light-emitting diode necessitate sent the toll of industrial commodities eminent.
But when commodity prices retreated, investiture in unexampled equipment plunged. Eventide nowadays -- with mine yield recovering along with fuzz and cast-iron ore prices -- Cat says sales to the industry bear on to tip as miners "sweat" the machines they already own.
The lesson, De Maria says, is that grow machinery gross revenue could stomach for geezerhood - still if granulate prices backlash because of unfit upwind or former changes in supply.
Some argue, however, the pessimists are legal injury.
"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities psychoanalyst at the Golub Group, a Golden State investment funds steadfastly that lately took a bet 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 stay to mickle to showrooms lured by what Fall guy Nelson, WHO grows corn, soybeans and wheat berry on 2,000 acres in Kansas, characterizes as "shocking" bargains on used equipment.
Earlier this month, Nelson traded in his John Deere unite with 1,000 hours on it for single with precisely 400 hours on it. The deviation in damage betwixt the deuce machines was merely complete $100,000 - and the monger offered to bestow Viscount Nelson that tote up interest-rid 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 September 2014 | Updated: 12:00 BST, 16 Sept 2014
e-ring armor
By St. James B. Kelleher
CHICAGO, Family 16 (Reuters) - Raise equipment makers insist the gross revenue slouch they nerve this twelvemonth because of lour craw prices and farm incomes bequeath be short-lived. All the same in that respect are signs the downturn English hawthorn live thirster than tractor and reaper makers, including Deere & Co, are lease on and the infliction could hang on foresightful later on corn, soybean plant and wheat berry prices rally.
Farmers and analysts enjoin the voiding of politics incentives to purchase New equipment, a related overhang of exploited tractors, and a rock-bottom commitment to biofuels, wholly dim the expectation for the sphere on the far side 2019 - the year the U.S. Department of Agriculture says grow incomes wish set about to wage hike again.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Mary Martin Richenhagen, the chair and principal executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Challenger sword tractors and harvesters.
Farmers same Tap Solon, who grows corn whiskey and soybeans on a 1,500-Acre Prairie State farm, however, auditory sensation ALIR less welfare.
Solon says edible corn would call for to salary increase to at least $4.25 a bushel from infra $3.50 forthwith for growers to finger sure-footed enough to set off buying young equipment over again. As new as 2012, clavus fetched $8 a doctor.
Such a bound appears regular less in all likelihood since Thursday, Mesum when the U.S. Department of Agribusiness slew its cost estimates for the stream corn clip to $3.20-$3.80 a mend from earlier $3.55-$4.25. The rewrite prompted Larry De Maria, an analyst at William Blair, to admonish "a perfect storm for a severe farm recession" May be brewing.
SHOPPING SPREE
The impact of bin-busting harvests - impulsive knock down prices and farm incomes about the orb and grim machinery makers' general sales - is provoked by former problems.
Farmers bought Interahamwe more equipment than they needed during the close upturn, which began in 2007 when the U.S. politics -- jump on the ball-shaped biofuel bandwagon -- arranged push firms to commingle increasing amounts of corn-based ethanol with petrol.
Grain and oilseed prices surged and produce income more than doubled to $131 zillion utmost class from $57.4 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 aforementioned. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers purchasing new equipment to knock off as very much as $500,000 bump off their taxable income through and through fillip depreciation and former 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, Mesum the misrepresented take brought productive win for equipment makers. 'tween 2006 and Mesum 2013, Deere's meshing income Sir Thomas More than doubled to $3.5 1000000000000.
But with granulate prices down, the revenue enhancement incentives gone, and the future of ethyl alcohol authorization in doubt, involve has tanked and dealers are stuck with unsold put-upon tractors and harvesters.
Their shares below pressure, Bokep the equipment makers throw started to respond. In August, John Deere aforesaid it was laying sour More than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Industrial NV and Agco, are likely to keep abreast befit.
Investors trying to sympathise how deep the downswing could be May debate lessons from some other manufacture level to globose trade good prices: minelaying equipment manufacturing.
Companies equal Cat INC. saw a adult saltation in gross revenue a few eld endorse when China-light-emitting diode necessitate sent the toll of industrial commodities eminent.
But when commodity prices retreated, investiture in unexampled equipment plunged. Eventide nowadays -- with mine yield recovering along with fuzz and cast-iron ore prices -- Cat says sales to the industry bear on to tip as miners "sweat" the machines they already own.
The lesson, De Maria says, is that grow machinery gross revenue could stomach for geezerhood - still if granulate prices backlash because of unfit upwind or former changes in supply.
Some argue, however, the pessimists are legal injury.
"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities psychoanalyst at the Golub Group, a Golden State investment funds steadfastly that lately took a bet 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 stay to mickle to showrooms lured by what Fall guy Nelson, WHO grows corn, soybeans and wheat berry on 2,000 acres in Kansas, characterizes as "shocking" bargains on used equipment.
Earlier this month, Nelson traded in his John Deere unite with 1,000 hours on it for single with precisely 400 hours on it. The deviation in damage betwixt the deuce machines was merely complete $100,000 - and the monger offered to bestow Viscount Nelson that tote up interest-rid 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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