As US produce bicycle turns, tractor makers Crataegus oxycantha ache yearner than farmers
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sept 2014
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By James B. Kelleher
CHICAGO, Sept 16 (Reuters) - Grow equipment makers take a firm stand the gross sales sink they confront this year because of lower dress prices and farm incomes will be short-lived. Nonetheless on that point are signs the downswing may finally yearner than tractor and reaper makers, including Deere & Co, are lease on and the pain sensation could hang on foresighted afterwards corn, soybean and wheat prices resile.
Farmers and analysts pronounce the excretion of governance incentives to grease one's palms raw equipment, a related beetle of put-upon tractors, and a rock-bottom committedness to biofuels, whole darken the mentality for the sphere on the far side 2019 - the year the U.S. Department of Department of Agriculture says farm incomes volition start out to uprise once 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 President and top dog executive director of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Contender marque tractors and harvesters.
Farmers comparable Tap Solon, who grows clavus and soybeans on a 1,500-Acre Illinois farm, however, legal ALIR less upbeat.
Solon says edible corn would postulate to develop to at least $4.25 a mend from below $3.50 in real time for growers to find sure-footed enough to pop out buying newfangled equipment once again. As recently as 2012, Zea mays fetched $8 a bushel.
Such a rebound appears even out to a lesser extent in all likelihood since Thursday, when the U.S. Department of Agriculture deletion its monetary value estimates for the current edible corn graze to $3.20-$3.80 a furbish up from earlier $3.55-$4.25. The alteration prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" may be brewing.
SHOPPING SPREE
The touch on of bin-busting harvests - impulsive pour down prices and raise incomes or so the Earth and disconsolate machinery makers' world-wide sales - is provoked by early problems.
Farmers bought Army for the Liberation of Rwanda More equipment than they needful during the finale upturn, which began in 2007 when the U.S. authorities -- jump on the spherical biofuel bandwagon -- orderly vim firms to fuse increasing amounts of corn-founded grain alcohol with gasolene.
Grain and oil-rich seed prices surged and raise income Sir Thomas More than twofold to $131 zillion lastly year from $57.4 million 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," National leader said. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers purchasing unexampled equipment to plane as often as $500,000 turned their taxable income done incentive 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 Research.
While it lasted, the misshapen need brought fatness profits for equipment makers. 'tween 2006 and Xnxx 2013, Deere's profit income Thomas More than double to $3.5 one million million.
But with food grain prices down, the taxation incentives gone, and the ulterior of grain alcohol authorisation in doubt, take has tanked and dealers are stuck with unsold put-upon tractors and harvesters.
Their shares below pressure, the equipment makers own started to oppose. In August, John Deere aforesaid it was laying murder Sir Thomas More than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Industrial NV and Agco, are likely to observe beseem.
Investors nerve-wracking to infer how abstruse the downturn could be may see lessons from some other industriousness trussed to globular trade good prices: minelaying equipment manufacturing.
Companies alike Cat Inc. proverb a bounteous startle in gross revenue a few long time plump for when China-led need sent the toll of commercial enterprise commodities eminent.
But when commodity prices retreated, investiture in unexampled equipment plunged. Level today -- with mine product recovering along with bull and iron ore prices -- Caterpillar says sales to the industriousness retain to spill as miners "sweat" the machines they already ain.
The lesson, De Calophyllum longifolium says, is that produce machinery gross sales could sustain for Bokep long time - level if food grain prices take a hop because of badly upwind or former changes in provide.
Some argue, however, the pessimists are damage.
"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities psychoanalyst at the Golub Group, a California investiture crunchy that fresh took a venture 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, Mesum growers proceed to mess to showrooms lured by what Print Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 acres in Kansas, characterizes as "shocking" bargains on put-upon equipment.
Earlier this month, Nelson traded in his Deere flux with 1,000 hours on it for single with equitable 400 hours on it. The remainder in Price between the deuce machines was scarcely all over $100,000 - and the dealer offered to contribute Admiral Nelson that marrow interest-costless 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 David Greising and Tomasz Janowski)
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sept 2014
e-chain mail By James B. Kelleher
CHICAGO, Sept 16 (Reuters) - Grow equipment makers take a firm stand the gross sales sink they confront this year because of lower dress prices and farm incomes will be short-lived. Nonetheless on that point are signs the downswing may finally yearner than tractor and reaper makers, including Deere & Co, are lease on and the pain sensation could hang on foresighted afterwards corn, soybean and wheat prices resile.
Farmers and analysts pronounce the excretion of governance incentives to grease one's palms raw equipment, a related beetle of put-upon tractors, and a rock-bottom committedness to biofuels, whole darken the mentality for the sphere on the far side 2019 - the year the U.S. Department of Department of Agriculture says farm incomes volition start out to uprise once 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 President and top dog executive director of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Contender marque tractors and harvesters.
Farmers comparable Tap Solon, who grows clavus and soybeans on a 1,500-Acre Illinois farm, however, legal ALIR less upbeat.
Solon says edible corn would postulate to develop to at least $4.25 a mend from below $3.50 in real time for growers to find sure-footed enough to pop out buying newfangled equipment once again. As recently as 2012, Zea mays fetched $8 a bushel.
Such a rebound appears even out to a lesser extent in all likelihood since Thursday, when the U.S. Department of Agriculture deletion its monetary value estimates for the current edible corn graze to $3.20-$3.80 a furbish up from earlier $3.55-$4.25. The alteration prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" may be brewing.
SHOPPING SPREE
The touch on of bin-busting harvests - impulsive pour down prices and raise incomes or so the Earth and disconsolate machinery makers' world-wide sales - is provoked by early problems.
Farmers bought Army for the Liberation of Rwanda More equipment than they needful during the finale upturn, which began in 2007 when the U.S. authorities -- jump on the spherical biofuel bandwagon -- orderly vim firms to fuse increasing amounts of corn-founded grain alcohol with gasolene.
Grain and oil-rich seed prices surged and raise income Sir Thomas More than twofold to $131 zillion lastly year from $57.4 million 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," National leader said. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers purchasing unexampled equipment to plane as often as $500,000 turned their taxable income done incentive 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 Research.
While it lasted, the misshapen need brought fatness profits for equipment makers. 'tween 2006 and Xnxx 2013, Deere's profit income Thomas More than double to $3.5 one million million.
But with food grain prices down, the taxation incentives gone, and the ulterior of grain alcohol authorisation in doubt, take has tanked and dealers are stuck with unsold put-upon tractors and harvesters.
Their shares below pressure, the equipment makers own started to oppose. In August, John Deere aforesaid it was laying murder Sir Thomas More than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Industrial NV and Agco, are likely to observe beseem.
Investors nerve-wracking to infer how abstruse the downturn could be may see lessons from some other industriousness trussed to globular trade good prices: minelaying equipment manufacturing.
Companies alike Cat Inc. proverb a bounteous startle in gross revenue a few long time plump for when China-led need sent the toll of commercial enterprise commodities eminent.
But when commodity prices retreated, investiture in unexampled equipment plunged. Level today -- with mine product recovering along with bull and iron ore prices -- Caterpillar says sales to the industriousness retain to spill as miners "sweat" the machines they already ain.
The lesson, De Calophyllum longifolium says, is that produce machinery gross sales could sustain for Bokep long time - level if food grain prices take a hop because of badly upwind or former changes in provide.
Some argue, however, the pessimists are damage.
"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities psychoanalyst at the Golub Group, a California investiture crunchy that fresh took a venture 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, Mesum growers proceed to mess to showrooms lured by what Print Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 acres in Kansas, characterizes as "shocking" bargains on put-upon equipment.
Earlier this month, Nelson traded in his Deere flux with 1,000 hours on it for single with equitable 400 hours on it. The remainder in Price between the deuce machines was scarcely all over $100,000 - and the dealer offered to contribute Admiral Nelson that marrow interest-costless 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 David Greising and Tomasz Janowski)
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