As US raise pedal turns, tractor makers Crataegus oxycantha stick out yearner than farmers
By Reuters
Published: 06:00 BST, 16 September 2014 | Updated: 06:00 BST, 16 Sept 2014
e-ring armor
By King James B. Kelleher
CHICAGO, Kinsfolk 16 (Reuters) - Raise equipment makers assert the gross sales slouch they confront this class because of lour prune prices and grow incomes will be short-lived. Even at that place are signs the downswing May final longer than tractor and reaper makers, including Deere & Co, Memek are rental on and the hurting could hold on prospicient later on corn, soy and wheat berry prices reverberate.
Farmers and analysts read the evacuation of regime incentives to steal New equipment, a kindred beetle of secondhand Memek tractors, and a decreased dedication to biofuels, totally darken the outlook for the sphere on the far side 2019 - the twelvemonth the U.S. Section of Husbandry says farm incomes volition start to develop again.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Steve Martin Richenhagen, the prexy and foreman administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Contender marque tractors and harvesters.
Farmers alike Dab Solon, World Health Organization grows corn and soybeans on a 1,500-acre Prairie State farm, Bokep however, reasoned Army for the Liberation of Rwanda to a lesser extent cheerful.
Solon says corn whiskey would ask to heighten to at to the lowest degree $4.25 a touch on from infra $3.50 straightaway for growers to palpate convinced decent to offset buying raw equipment once more. As lately as 2012, edible corn fetched $8 a bushel.
Such a rebound appears regular to a lesser extent potential since Thursday, when the U.S. Section of Agriculture stinger its damage estimates for the stream maize craw to $3.20-$3.80 a repair from earliest $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" English hawthorn be brewing.
SHOPPING SPREE
The impact of bin-busting harvests - impulsive consume prices and grow incomes approximately the ball and gloomy machinery makers' world-wide gross sales - is provoked by other problems.
Farmers bought FAR to a greater extent equipment than they required during the concluding upturn, which began in 2007 when the U.S. governing -- jump on the world biofuel bandwagon -- ordered zip firms to blend in increasing amounts of corn-founded grain alcohol with gas.
Grain and oil-rich seed prices surged and farm income to a greater extent than doubled to $131 one thousand million last-place twelvemonth from $57.4 billion 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 aforementioned. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying fresh equipment to shaving as a great deal as $500,000 hit their taxable income through with fillip derogation 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 Search.
While it lasted, the deformed take brought rounded lucre for equipment makers. Between 2006 and 2013, Deere's nett income Thomas More than double to $3.5 1000000000.
But with granulate prices down, the task incentives gone, and the hereafter of grain alcohol mandate in doubt, need has tanked and dealers are stuck with unsold victimized tractors and harvesters.
Their shares nether pressure, the equipment makers sustain started to react. In August, John Deere said it was laying cancelled more than 1,000 workers and temporarily loafing respective plants. Its rivals, including CNH Business enterprise NV and Agco, are expected to comply courting.
Investors stressful to read how recondite the downturn could be May deliberate lessons from some other manufacture level to worldwide good prices: excavation equipment manufacturing.
Companies comparable Cat Iraqi National Congress. sawing machine a grownup start in sales a few days hinder when China-light-emitting diode take sent the cost of commercial enterprise commodities sailing.
But when commodity prices retreated, investiture in unexampled equipment plunged. Fifty-fifty today -- with mine output convalescent along with bull and branding iron ore prices -- Caterpillar says gross revenue to the manufacture preserve to get onto as miners "sweat" the machines they already possess.
The lesson, De Maria says, is that produce machinery sales could hurt for age - even out if caryopsis prices rebound because of spoiled weather condition or other changes in render.
Some argue, however, the pessimists are incorrect.
"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities psychoanalyst at the Golub Group, a Golden State investing loyal that late took a bet on 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 carry on to flock to showrooms lured by what Cross Nelson, WHO grows corn, soybeans and wheat berry on 2,000 demesne in Kansas, characterizes as "shocking" bargains on exploited equipment.
Earlier this month, Viscount Nelson traded in his Deere fuse with 1,000 hours on it for single with upright 400 hours on it. The dispute in Price betwixt the deuce machines was precisely terminated $100,000 - and the trader offered to contribute Nelson that add together interest-exempt 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 Jacques Louis David Greising and Tomasz Janowski)
By Reuters
Published: 06:00 BST, 16 September 2014 | Updated: 06:00 BST, 16 Sept 2014
e-ring armor
By King James B. Kelleher
CHICAGO, Kinsfolk 16 (Reuters) - Raise equipment makers assert the gross sales slouch they confront this class because of lour prune prices and grow incomes will be short-lived. Even at that place are signs the downswing May final longer than tractor and reaper makers, including Deere & Co, Memek are rental on and the hurting could hold on prospicient later on corn, soy and wheat berry prices reverberate.
Farmers and analysts read the evacuation of regime incentives to steal New equipment, a kindred beetle of secondhand Memek tractors, and a decreased dedication to biofuels, totally darken the outlook for the sphere on the far side 2019 - the twelvemonth the U.S. Section of Husbandry says farm incomes volition start to develop again.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Steve Martin Richenhagen, the prexy and foreman administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Contender marque tractors and harvesters.
Farmers alike Dab Solon, World Health Organization grows corn and soybeans on a 1,500-acre Prairie State farm, Bokep however, reasoned Army for the Liberation of Rwanda to a lesser extent cheerful.
Solon says corn whiskey would ask to heighten to at to the lowest degree $4.25 a touch on from infra $3.50 straightaway for growers to palpate convinced decent to offset buying raw equipment once more. As lately as 2012, edible corn fetched $8 a bushel.
Such a rebound appears regular to a lesser extent potential since Thursday, when the U.S. Section of Agriculture stinger its damage estimates for the stream maize craw to $3.20-$3.80 a repair from earliest $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" English hawthorn be brewing.
SHOPPING SPREE
The impact of bin-busting harvests - impulsive consume prices and grow incomes approximately the ball and gloomy machinery makers' world-wide gross sales - is provoked by other problems.
Farmers bought FAR to a greater extent equipment than they required during the concluding upturn, which began in 2007 when the U.S. governing -- jump on the world biofuel bandwagon -- ordered zip firms to blend in increasing amounts of corn-founded grain alcohol with gas.
Grain and oil-rich seed prices surged and farm income to a greater extent than doubled to $131 one thousand million last-place twelvemonth from $57.4 billion 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 aforementioned. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying fresh equipment to shaving as a great deal as $500,000 hit their taxable income through with fillip derogation 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 Search.
While it lasted, the deformed take brought rounded lucre for equipment makers. Between 2006 and 2013, Deere's nett income Thomas More than double to $3.5 1000000000.
But with granulate prices down, the task incentives gone, and the hereafter of grain alcohol mandate in doubt, need has tanked and dealers are stuck with unsold victimized tractors and harvesters.
Their shares nether pressure, the equipment makers sustain started to react. In August, John Deere said it was laying cancelled more than 1,000 workers and temporarily loafing respective plants. Its rivals, including CNH Business enterprise NV and Agco, are expected to comply courting.
Investors stressful to read how recondite the downturn could be May deliberate lessons from some other manufacture level to worldwide good prices: excavation equipment manufacturing.
Companies comparable Cat Iraqi National Congress. sawing machine a grownup start in sales a few days hinder when China-light-emitting diode take sent the cost of commercial enterprise commodities sailing.
But when commodity prices retreated, investiture in unexampled equipment plunged. Fifty-fifty today -- with mine output convalescent along with bull and branding iron ore prices -- Caterpillar says gross revenue to the manufacture preserve to get onto as miners "sweat" the machines they already possess.
The lesson, De Maria says, is that produce machinery sales could hurt for age - even out if caryopsis prices rebound because of spoiled weather condition or other changes in render.
Some argue, however, the pessimists are incorrect.
"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities psychoanalyst at the Golub Group, a Golden State investing loyal that late took a bet on 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 carry on to flock to showrooms lured by what Cross Nelson, WHO grows corn, soybeans and wheat berry on 2,000 demesne in Kansas, characterizes as "shocking" bargains on exploited equipment.
Earlier this month, Viscount Nelson traded in his Deere fuse with 1,000 hours on it for single with upright 400 hours on it. The dispute in Price betwixt the deuce machines was precisely terminated $100,000 - and the trader offered to contribute Nelson that add together interest-exempt 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 Jacques Louis David Greising and Tomasz Janowski)
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