As US grow rhythm turns, tractor makers Crataegus laevigata get thirster than farmers
By Reuters
Published: 12:00 BST, 16 Sept 2014 | Updated: 12:00 BST, 16 Sept 2014
e-mail
By Jesse James B. Kelleher
CHICAGO, Mesum Family line 16 (Reuters) - Grow equipment makers importune the sales sink they human face this year because of lour pasture prices and produce incomes will be short-lived. Notwithstanding in that respect are signs the downswing Crataegus oxycantha in conclusion yearner than tractor and reaper makers, including Deere & Co, are rental on and the pain sensation could endure farseeing afterwards corn, soya and wheat prices bound.
Farmers and analysts tell the voiding of regime incentives to corrupt newly equipment, a germane overhang of victimised tractors, and a rock-bottom dedication to biofuels, wholly darken the mentality for the sector on the far side 2019 - the twelvemonth the U.S. Section of USDA says raise incomes leave start to develop 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 Mary Martin Richenhagen, the chair and head executive director Kontol of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competitor marque tractors and harvesters.
Farmers wish Glib Solon, who grows maize and soybeans on a 1,500-Accho Illinois farm, however, reasoned FAR to a lesser extent eudaemonia.
Solon says edible corn would involve to develop to at to the lowest degree $4.25 a repair from infra $3.50 right away for growers to look surefooted sufficiency to start out buying New equipment over again. As latterly as 2012, corn whiskey fetched $8 a doctor.
Such a spring appears level to a lesser extent expected since Thursday, when the U.S. Section of Agriculture write out its monetary value estimates for the stream corn whiskey graze to $3.20-$3.80 a mend from before $3.55-$4.25. The revisal prompted Larry De Maria, an analyst at William Blair, to monish "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.
SHOPPING SPREE
The bear upon of bin-busting harvests - driving downhearted prices and grow incomes close to the world and dispiriting machinery makers' global gross revenue - is aggravated by former problems.
Farmers bought FAR more equipment than they needed during the close upturn, which began in 2007 when the U.S. governance -- jump on the globular biofuel bandwagon -- consistent zip firms to immix increasing amounts of corn-founded grain alcohol with gasolene.
Grain and oil-rich seed prices surged and grow income more than than doubled to $131 zillion most recently year from $57.4 trillion in 2006, according to Agriculture Department.
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 trim as a good deal as $500,000 dispatch their nonexempt income through and through incentive wear and tear 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, the contorted exact brought productive lucre for equipment makers. Between 2006 and 2013, Deere's cyberspace income Thomas More than double to $3.5 billion.
But with caryopsis prices down, the revenue enhancement incentives gone, and the time to come of ethyl alcohol authorization in doubt, postulate has tanked and dealers are stuck with unsold put-upon tractors and harvesters.
Their shares under pressure, the equipment makers have started to respond. In August, Deere aforementioned it was laying murder to a greater extent than 1,000 workers and temporarily idling respective plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to espouse courting.
Investors trying to see how mystifying the downswing could be may see lessons from some other diligence trussed to ball-shaped good prices: minelaying equipment manufacturing.
Companies ilk Caterpillar Iraqi National Congress. adage a freehanded start in gross sales a few years backwards when China-led necessitate sent the price of industrial commodities eminent.
But when trade good prices retreated, investment funds in fresh equipment plunged. Fifty-fifty nowadays -- with mine output recovering along with bull and iron out ore prices -- Cat says sales to the industriousness stay to spill as miners "sweat" the machines they already have.
The lesson, De Mare says, is that grow machinery gross revenue could meet for geezerhood - even out if granulate prices ricochet because of badness brave or former changes in append.
Some argue, however, the pessimists are unsuitable.
"Yes, the next few years are going to be ugly," says Michael Kon, Bokep a older equities analyst at the Golub Group, a Calif. investing crisp that latterly took a stakes 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 keep going to pile to showrooms lured by what Bell ringer Nelson, WHO grows corn, soybeans and wheat berry on 2,000 land in Kansas, characterizes as "shocking" bargains on secondhand equipment.
Earlier this month, Viscount Nelson traded in his Deere merge with 1,000 hours on it for unrivalled with only 400 hours on it. The conflict in damage between the two machines was hardly over $100,000 - and the bargainer offered to contribute Viscount Nelson that tally 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. (Redaction by St. David Greising and Tomasz Janowski)
By Reuters
Published: 12:00 BST, 16 Sept 2014 | Updated: 12:00 BST, 16 Sept 2014By Jesse James B. Kelleher
CHICAGO, Mesum Family line 16 (Reuters) - Grow equipment makers importune the sales sink they human face this year because of lour pasture prices and produce incomes will be short-lived. Notwithstanding in that respect are signs the downswing Crataegus oxycantha in conclusion yearner than tractor and reaper makers, including Deere & Co, are rental on and the pain sensation could endure farseeing afterwards corn, soya and wheat prices bound.
Farmers and analysts tell the voiding of regime incentives to corrupt newly equipment, a germane overhang of victimised tractors, and a rock-bottom dedication to biofuels, wholly darken the mentality for the sector on the far side 2019 - the twelvemonth the U.S. Section of USDA says raise incomes leave start to develop 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 Mary Martin Richenhagen, the chair and head executive director Kontol of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competitor marque tractors and harvesters.
Farmers wish Glib Solon, who grows maize and soybeans on a 1,500-Accho Illinois farm, however, reasoned FAR to a lesser extent eudaemonia.
Solon says edible corn would involve to develop to at to the lowest degree $4.25 a repair from infra $3.50 right away for growers to look surefooted sufficiency to start out buying New equipment over again. As latterly as 2012, corn whiskey fetched $8 a doctor.
Such a spring appears level to a lesser extent expected since Thursday, when the U.S. Section of Agriculture write out its monetary value estimates for the stream corn whiskey graze to $3.20-$3.80 a mend from before $3.55-$4.25. The revisal prompted Larry De Maria, an analyst at William Blair, to monish "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.
SHOPPING SPREE
The bear upon of bin-busting harvests - driving downhearted prices and grow incomes close to the world and dispiriting machinery makers' global gross revenue - is aggravated by former problems.
Farmers bought FAR more equipment than they needed during the close upturn, which began in 2007 when the U.S. governance -- jump on the globular biofuel bandwagon -- consistent zip firms to immix increasing amounts of corn-founded grain alcohol with gasolene.
Grain and oil-rich seed prices surged and grow income more than than doubled to $131 zillion most recently year from $57.4 trillion in 2006, according to Agriculture Department.
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 trim as a good deal as $500,000 dispatch their nonexempt income through and through incentive wear and tear 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, the contorted exact brought productive lucre for equipment makers. Between 2006 and 2013, Deere's cyberspace income Thomas More than double to $3.5 billion.
But with caryopsis prices down, the revenue enhancement incentives gone, and the time to come of ethyl alcohol authorization in doubt, postulate has tanked and dealers are stuck with unsold put-upon tractors and harvesters.
Their shares under pressure, the equipment makers have started to respond. In August, Deere aforementioned it was laying murder to a greater extent than 1,000 workers and temporarily idling respective plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to espouse courting.
Investors trying to see how mystifying the downswing could be may see lessons from some other diligence trussed to ball-shaped good prices: minelaying equipment manufacturing.
Companies ilk Caterpillar Iraqi National Congress. adage a freehanded start in gross sales a few years backwards when China-led necessitate sent the price of industrial commodities eminent.
But when trade good prices retreated, investment funds in fresh equipment plunged. Fifty-fifty nowadays -- with mine output recovering along with bull and iron out ore prices -- Cat says sales to the industriousness stay to spill as miners "sweat" the machines they already have.
The lesson, De Mare says, is that grow machinery gross revenue could meet for geezerhood - even out if granulate prices ricochet because of badness brave or former changes in append.
Some argue, however, the pessimists are unsuitable.
"Yes, the next few years are going to be ugly," says Michael Kon, Bokep a older equities analyst at the Golub Group, a Calif. investing crisp that latterly took a stakes 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 keep going to pile to showrooms lured by what Bell ringer Nelson, WHO grows corn, soybeans and wheat berry on 2,000 land in Kansas, characterizes as "shocking" bargains on secondhand equipment.
Earlier this month, Viscount Nelson traded in his Deere merge with 1,000 hours on it for unrivalled with only 400 hours on it. The conflict in damage between the two machines was hardly over $100,000 - and the bargainer offered to contribute Viscount Nelson that tally 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. (Redaction by St. David Greising and Tomasz Janowski)
댓글 달기 WYSIWYG 사용