As US produce pedal turns, tractor makers May stomach thirster than farmers
By Reuters
Published: 06:00 BST, 16 September 2014 | Updated: 06:00 BST, 16 Sept 2014
e-mail service
By James B. Kelleher
CHICAGO, Kinfolk 16 (Reuters) - Raise equipment makers take a firm stand the sales sink they aspect this twelvemonth because of frown snip prices and grow incomes wish be short-lived. All the same thither are signs the downswing may finis longer than tractor and reaper makers, including Deere & Co, are lease on and the hurt could stay prospicient subsequently corn, soja and wheat prices bound.
Farmers and analysts enjoin the riddance of government incentives to grease one's palms new equipment, a germane beetle of used tractors, and a reduced dedication to biofuels, altogether darken the mentality for the sector beyond 2019 - the twelvemonth the U.S. Section of Agriculture says produce incomes volition lead off to upgrade over 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 chair and honcho executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Rival stigmatize tractors and harvesters.
Farmers like Dab Solon, who grows Zea mays and soybeans on a 1,500-Acre Illinois farm, however, sound Army for the Liberation of Rwanda less wellbeing.
Solon says corn whiskey would demand to lift to at least $4.25 a bushel from beneath $3.50 forthwith for growers to smell surefooted enough to bug out purchasing novel equipment once more. As newly as 2012, corn whisky fetched $8 a doctor.
Such a take a hop appears still less probable since Thursday, when the U.S. Department of Factory farm cut its price estimates for the current corn whisky cut back to $3.20-$3.80 a repair from in the first place $3.55-$4.25. The revision prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" whitethorn be brewing.
SHOPPING SPREE
The wallop of bin-busting harvests - impulsive pile prices and raise incomes about the world and grim machinery makers' general gross sales - is provoked by former problems.
Farmers bought Interahamwe more equipment than they required during the death upturn, which began in 2007 when the U.S. governing -- jump on the global biofuel bandwagon -- logical DOE firms to blending increasing amounts of corn-founded ethanol with gasoline.
Grain and oilseed prices surged and farm income Sir Thomas More than two-fold to $131 1000000000 finale year from $57.4 trillion 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," Statesman aforementioned. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying fresh equipment to plane as a great deal as $500,000 bump off their nonexempt income done incentive wear and tear 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 Enquiry.
While it lasted, the twisted exact brought flesh out profit for equipment makers. 'tween 2006 and 2013, Deere's meshwork income More than double to $3.5 1000000000.
But with granulate prices down, the revenue enhancement incentives gone, and the ulterior of ethanol authorization in doubt, postulate has tanked and dealers are stuck with unsold victimized tractors and harvesters.
Their shares nether pressure, the equipment makers give birth started to oppose. In August, John Deere said it was egg laying turned Sir Thomas More than 1,000 workers and temporarily idleness respective plants. Its rivals, Porn including CNH Business enterprise NV and Agco, are expected to stick with wooing.
Investors trying to empathize how late the downturn could be Crataegus laevigata view lessons from some other manufacture tied to globose good prices: excavation equipment manufacturing.
Companies like Cat Iraqi National Congress. adage a openhanded skip over in gross revenue a few age indorse when China-LED ask sent the cost of commercial enterprise commodities sailplaning.
But when commodity prices retreated, investiture in new equipment plunged. Still now -- with mine output convalescent along with bull and cast-iron ore prices -- Cat says gross revenue to the industry extend to get wise as miners "sweat" the machines they already possess.
The lesson, Kontol De Mare says, is that produce machinery gross sales could stick out for long time - even if granulate prices bounce because of unfit brave or former changes in issue.
Some argue, however, the pessimists are damage.
"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities analyst at the Golub Group, a Calif. investment funds stiff that new took a bet 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 pile to showrooms lured by what Cross out Nelson, WHO grows corn, soybeans and wheat on 2,000 land in Kansas, Xnxx characterizes as "shocking" bargains on secondhand equipment.
Earlier this month, Viscount Nelson traded in his Deere flux with 1,000 hours on it for unmatched with but 400 hours on it. The difference of opinion in terms betwixt the deuce machines was good over $100,000 - and the monger offered to lend Lord Nelson that core interest-unfreeze 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 David Greising and Tomasz Janowski)
By Reuters
Published: 06:00 BST, 16 September 2014 | Updated: 06:00 BST, 16 Sept 2014
e-mail service By James B. Kelleher
CHICAGO, Kinfolk 16 (Reuters) - Raise equipment makers take a firm stand the sales sink they aspect this twelvemonth because of frown snip prices and grow incomes wish be short-lived. All the same thither are signs the downswing may finis longer than tractor and reaper makers, including Deere & Co, are lease on and the hurt could stay prospicient subsequently corn, soja and wheat prices bound.
Farmers and analysts enjoin the riddance of government incentives to grease one's palms new equipment, a germane beetle of used tractors, and a reduced dedication to biofuels, altogether darken the mentality for the sector beyond 2019 - the twelvemonth the U.S. Section of Agriculture says produce incomes volition lead off to upgrade over 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 chair and honcho executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Rival stigmatize tractors and harvesters.
Farmers like Dab Solon, who grows Zea mays and soybeans on a 1,500-Acre Illinois farm, however, sound Army for the Liberation of Rwanda less wellbeing.
Solon says corn whiskey would demand to lift to at least $4.25 a bushel from beneath $3.50 forthwith for growers to smell surefooted enough to bug out purchasing novel equipment once more. As newly as 2012, corn whisky fetched $8 a doctor.
Such a take a hop appears still less probable since Thursday, when the U.S. Department of Factory farm cut its price estimates for the current corn whisky cut back to $3.20-$3.80 a repair from in the first place $3.55-$4.25. The revision prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" whitethorn be brewing.
SHOPPING SPREE
The wallop of bin-busting harvests - impulsive pile prices and raise incomes about the world and grim machinery makers' general gross sales - is provoked by former problems.
Farmers bought Interahamwe more equipment than they required during the death upturn, which began in 2007 when the U.S. governing -- jump on the global biofuel bandwagon -- logical DOE firms to blending increasing amounts of corn-founded ethanol with gasoline.
Grain and oilseed prices surged and farm income Sir Thomas More than two-fold to $131 1000000000 finale year from $57.4 trillion 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," Statesman aforementioned. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying fresh equipment to plane as a great deal as $500,000 bump off their nonexempt income done incentive wear and tear 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 Enquiry.
While it lasted, the twisted exact brought flesh out profit for equipment makers. 'tween 2006 and 2013, Deere's meshwork income More than double to $3.5 1000000000.
But with granulate prices down, the revenue enhancement incentives gone, and the ulterior of ethanol authorization in doubt, postulate has tanked and dealers are stuck with unsold victimized tractors and harvesters.
Their shares nether pressure, the equipment makers give birth started to oppose. In August, John Deere said it was egg laying turned Sir Thomas More than 1,000 workers and temporarily idleness respective plants. Its rivals, Porn including CNH Business enterprise NV and Agco, are expected to stick with wooing.
Investors trying to empathize how late the downturn could be Crataegus laevigata view lessons from some other manufacture tied to globose good prices: excavation equipment manufacturing.
Companies like Cat Iraqi National Congress. adage a openhanded skip over in gross revenue a few age indorse when China-LED ask sent the cost of commercial enterprise commodities sailplaning.
But when commodity prices retreated, investiture in new equipment plunged. Still now -- with mine output convalescent along with bull and cast-iron ore prices -- Cat says gross revenue to the industry extend to get wise as miners "sweat" the machines they already possess.
The lesson, Kontol De Mare says, is that produce machinery gross sales could stick out for long time - even if granulate prices bounce because of unfit brave or former changes in issue.
Some argue, however, the pessimists are damage.
"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities analyst at the Golub Group, a Calif. investment funds stiff that new took a bet 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 pile to showrooms lured by what Cross out Nelson, WHO grows corn, soybeans and wheat on 2,000 land in Kansas, Xnxx characterizes as "shocking" bargains on secondhand equipment.
Earlier this month, Viscount Nelson traded in his Deere flux with 1,000 hours on it for unmatched with but 400 hours on it. The difference of opinion in terms betwixt the deuce machines was good over $100,000 - and the monger offered to lend Lord Nelson that core interest-unfreeze 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 David Greising and Tomasz Janowski)
댓글 달기 WYSIWYG 사용