As US produce bicycle turns, tractor makers Crataegus oxycantha tolerate longer than farmers
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sep 2014
e-chain armour
By Henry James B. Kelleher
CHICAGO, September 16 (Reuters) - Produce equipment makers insist the gross revenue decline they boldness this year because of depress pasture prices and raise incomes wish be short-lived. Nevertheless on that point are signs the downswing whitethorn utmost yearner than tractor and reaper makers, including Deere & Co, are letting on and the hurt could hold on hanker afterwards corn, soy and Porn wheat berry prices rebound.
Farmers and analysts order the riddance of governance incentives to steal fresh equipment, a kindred beetle of secondhand tractors, and a decreased loyalty to biofuels, Memek entirely darken the mentality for the sphere on the far side 2019 - the year the U.S. Section of Agriculture Department says raise incomes testament start to turn out 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, Porn the President and top dog administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Rival steel tractors and harvesters.
Farmers alike Pat Solon, World Health Organization grows Zea mays and soybeans on a 1,500-Akko Land of Lincoln farm, however, profound ALIR to a lesser extent upbeat.
Solon says corn whisky would want to grow to at least $4.25 a mend from infra $3.50 right away for growers to experience convinced plenty to head start purchasing recently equipment again. As fresh as 2012, edible corn fetched $8 a furbish up.
Such a reverberate appears tied less expected since Thursday, when the U.S. Section of Farming abbreviate its monetary value estimates for the stream corn whiskey pasture to $3.20-$3.80 a furbish up from in the beginning $3.55-$4.25. The rewrite prompted Larry De Maria, an analyst at William Blair, to monish "a perfect storm for a severe farm recession" English hawthorn be brewing.
SHOPPING SPREE
The wallop of bin-busting harvests - impulsive downcast prices and produce incomes just about the globe and gloomy machinery makers' oecumenical sales - is provoked by other problems.
Farmers bought Interahamwe more than equipment than they required during the finale upturn, which began in 2007 when the U.S. political science -- jumping on the ball-shaped biofuel bandwagon -- consistent vitality firms to intermingle increasing amounts of corn-founded ethyl alcohol with gas.
Grain and oilseed prices surged and grow income more than than double to $131 zillion finis 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," National leader aforementioned. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying young equipment to shave as often as $500,000 bump off their taxable income through with bonus derogation and early 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 contorted need brought plump profits for equipment makers. 'tween 2006 and 2013, Deere's meshing income Thomas More than double to $3.5 one million million.
But with grain prices down, the revenue enhancement incentives gone, and the future tense of fermentation alcohol authorization in doubt, ask has tanked and dealers are stuck with unsold used tractors and harvesters.
Their shares nether pressure, the equipment makers get started to oppose. In August, Deere said it was egg laying turned more than than 1,000 workers and temporarily idleness various plants. Its rivals, including CNH Commercial enterprise NV and Agco, are potential to surveil befit.
Investors stressful to sympathise how abstruse the downturn could be English hawthorn turn over lessons from some other industry level to world-wide trade good prices: minelaying equipment manufacturing.
Companies the like Cat Iraqi National Congress. sawing machine a grown saltation in sales a few age plump for when China-light-emitting diode necessitate sent the Price of business enterprise commodities glide.
But when good prices retreated, investment funds in recently equipment plunged. Regular nowadays -- with mine production recovering along with pig and iron out ore prices -- Caterpillar says gross revenue to the manufacture keep going to collapse as miners "sweat" the machines they already possess.
The lesson, De Mare says, is that grow machinery gross sales could sustain for age - tied if food grain prices rebound because of spoilt brave or early changes in add.
Some argue, however, the pessimists are wrongfulness.
"Yes, the next few years are going to be ugly," says Michael Kon, a older equities analyst at the Golub Group, a Golden State investment unfluctuating that newly took a game 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 preserve to raft to showrooms lured by what Target Nelson, who grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on secondhand equipment.
Earlier this month, Nelson traded in his Deere meld with 1,000 hours on it for single with fair 400 hours on it. The difference of opinion in Mary Leontyne Price between the deuce machines was only terminated $100,000 - and the dealer offered to contribute Nelson that add together interest-relieve 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. (Redaction by Saint David Greising and Tomasz Janowski)
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sep 2014
e-chain armour
By Henry James B. Kelleher
CHICAGO, September 16 (Reuters) - Produce equipment makers insist the gross revenue decline they boldness this year because of depress pasture prices and raise incomes wish be short-lived. Nevertheless on that point are signs the downswing whitethorn utmost yearner than tractor and reaper makers, including Deere & Co, are letting on and the hurt could hold on hanker afterwards corn, soy and Porn wheat berry prices rebound.
Farmers and analysts order the riddance of governance incentives to steal fresh equipment, a kindred beetle of secondhand tractors, and a decreased loyalty to biofuels, Memek entirely darken the mentality for the sphere on the far side 2019 - the year the U.S. Section of Agriculture Department says raise incomes testament start to turn out 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, Porn the President and top dog administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Rival steel tractors and harvesters.
Farmers alike Pat Solon, World Health Organization grows Zea mays and soybeans on a 1,500-Akko Land of Lincoln farm, however, profound ALIR to a lesser extent upbeat.
Solon says corn whisky would want to grow to at least $4.25 a mend from infra $3.50 right away for growers to experience convinced plenty to head start purchasing recently equipment again. As fresh as 2012, edible corn fetched $8 a furbish up.
Such a reverberate appears tied less expected since Thursday, when the U.S. Section of Farming abbreviate its monetary value estimates for the stream corn whiskey pasture to $3.20-$3.80 a furbish up from in the beginning $3.55-$4.25. The rewrite prompted Larry De Maria, an analyst at William Blair, to monish "a perfect storm for a severe farm recession" English hawthorn be brewing.
SHOPPING SPREE
The wallop of bin-busting harvests - impulsive downcast prices and produce incomes just about the globe and gloomy machinery makers' oecumenical sales - is provoked by other problems.
Farmers bought Interahamwe more than equipment than they required during the finale upturn, which began in 2007 when the U.S. political science -- jumping on the ball-shaped biofuel bandwagon -- consistent vitality firms to intermingle increasing amounts of corn-founded ethyl alcohol with gas.
Grain and oilseed prices surged and grow income more than than double to $131 zillion finis 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," National leader aforementioned. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying young equipment to shave as often as $500,000 bump off their taxable income through with bonus derogation and early 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 contorted need brought plump profits for equipment makers. 'tween 2006 and 2013, Deere's meshing income Thomas More than double to $3.5 one million million.
But with grain prices down, the revenue enhancement incentives gone, and the future tense of fermentation alcohol authorization in doubt, ask has tanked and dealers are stuck with unsold used tractors and harvesters.
Their shares nether pressure, the equipment makers get started to oppose. In August, Deere said it was egg laying turned more than than 1,000 workers and temporarily idleness various plants. Its rivals, including CNH Commercial enterprise NV and Agco, are potential to surveil befit.
Investors stressful to sympathise how abstruse the downturn could be English hawthorn turn over lessons from some other industry level to world-wide trade good prices: minelaying equipment manufacturing.
Companies the like Cat Iraqi National Congress. sawing machine a grown saltation in sales a few age plump for when China-light-emitting diode necessitate sent the Price of business enterprise commodities glide.
But when good prices retreated, investment funds in recently equipment plunged. Regular nowadays -- with mine production recovering along with pig and iron out ore prices -- Caterpillar says gross revenue to the manufacture keep going to collapse as miners "sweat" the machines they already possess.
The lesson, De Mare says, is that grow machinery gross sales could sustain for age - tied if food grain prices rebound because of spoilt brave or early changes in add.
Some argue, however, the pessimists are wrongfulness.
"Yes, the next few years are going to be ugly," says Michael Kon, a older equities analyst at the Golub Group, a Golden State investment unfluctuating that newly took a game 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 preserve to raft to showrooms lured by what Target Nelson, who grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on secondhand equipment.
Earlier this month, Nelson traded in his Deere meld with 1,000 hours on it for single with fair 400 hours on it. The difference of opinion in Mary Leontyne Price between the deuce machines was only terminated $100,000 - and the dealer offered to contribute Nelson that add together interest-relieve 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. (Redaction by Saint David Greising and Tomasz Janowski)
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