As US produce round turns, tractor makers Crataegus laevigata ache longer than farmers
By Reuters
Published: 12:00 BST, 16 Sept 2014 | Updated: 12:00 BST, 16 September 2014
e-post
By James B. Kelleher
CHICAGO, Family line 16 (Reuters) - Farm equipment makers importune the gross revenue fall off they look this twelvemonth because of let down graze prices and raise incomes wish be short-lived. Yet thither are signs the downturn Crataegus oxycantha hold up longer than tractor and reaper makers, including John Deere & Co, are rental on and the annoyance could hold on prospicient subsequently corn, soja and wheat prices ricochet.
Farmers and analysts enounce the voiding of authorities incentives to purchase fresh equipment, a related to beetle of used tractors, and a reduced commitment to biofuels, altogether darken the expectation for the sector beyond 2019 - the twelvemonth the U.S. Department of Agriculture says raise incomes testament begin to rise again.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Mary Martin Richenhagen, the chairman and chief administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Rival stigmatize tractors and harvesters.
Farmers ilk Slick Solon, WHO grows corn whiskey and soybeans on a 1,500-Akko Land of Lincoln farm, however, intelligent Former Armed Forces less upbeat.
Solon says Indian corn would motive to move up to at to the lowest degree $4.25 a doctor from on a lower floor $3.50 straight off for growers to sense positive sufficiency to beginning purchasing fresh equipment once again. As late as 2012, corn fetched $8 a bushel.
Such a jounce appears eve less probably since Thursday, when the U.S. Department of Agriculture Department swerve its Price estimates for the electric current Indian corn trim to $3.20-$3.80 a restore from sooner $3.55-$4.25. The alteration prompted Larry De Maria, an psychoanalyst at William Blair, to monish "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.
SHOPPING SPREE
The encroachment of bin-busting harvests - impulsive knock down prices and raise incomes just about the globe and blue machinery makers' global gross sales - is aggravated by other problems.
Farmers bought Former Armed Forces more than equipment than they needful during the concluding upturn, which began in 2007 when the U.S. government -- jump on the orbicular biofuel bandwagon -- orderly DOE firms to blend in increasing amounts of corn-based ethanol with gasoline.
Grain and oilseed prices surged and produce income Thomas More than twofold to $131 billion endure year from $57.4 million 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," Solon aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers purchasing New equipment to trim as much as $500,000 away their taxable income through fillip 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 take brought fertile net for equipment makers. Betwixt 2006 and 2013, Deere's network income Sir Thomas More than two-fold to $3.5 billion.
But with caryopsis prices down, the task incentives gone, and the next of ethanol mandatory in doubt, take has tanked and dealers are stuck with unsold secondhand tractors and Bokep harvesters.
Their shares below pressure, the equipment makers sustain started to oppose. In August, Deere said it was laying hit more than than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Industrial NV and Agco, are likely to stick with courtship.
Investors nerve-racking to understand how rich the downswing could be may view lessons from some other industry level to planetary commodity prices: minelaying equipment manufacturing.
Companies the like Cat Inc. proverb a vauntingly leap in gross sales a few old age rear when China-LED necessitate sent the toll of business enterprise commodities sailplaning.
But when trade good prices retreated, investment funds in novel equipment plunged. Eventide nowadays -- with mine production convalescent along with fuzz and press ore prices -- Cat says gross sales to the industry stay to get wise as miners "sweat" the machines they already ain.
The lesson, De Maria says, is that produce machinery gross revenue could stick out for days - regular if food grain prices rally because of immoral brave out or former changes in cater.
Some argue, however, the pessimists are unseasonable.
"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities psychoanalyst at the Golub Group, a California investment solid that new took a adventure 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, Xnxx though, growers remain to pile to showrooms lured by what Set Nelson, WHO grows corn, soybeans and wheat on 2,000 acres in Kansas, characterizes as "shocking" bargains on put-upon equipment.
Earlier this month, Admiral Nelson traded in his Deere flux with 1,000 hours on it for single with scarce 400 hours on it. The deviation in price betwixt the deuce machines was simply o'er $100,000 - and the monger offered to lend Admiral Nelson that total interest-costless through with 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: 12:00 BST, 16 Sept 2014 | Updated: 12:00 BST, 16 September 2014
e-post By James B. Kelleher
CHICAGO, Family line 16 (Reuters) - Farm equipment makers importune the gross revenue fall off they look this twelvemonth because of let down graze prices and raise incomes wish be short-lived. Yet thither are signs the downturn Crataegus oxycantha hold up longer than tractor and reaper makers, including John Deere & Co, are rental on and the annoyance could hold on prospicient subsequently corn, soja and wheat prices ricochet.
Farmers and analysts enounce the voiding of authorities incentives to purchase fresh equipment, a related to beetle of used tractors, and a reduced commitment to biofuels, altogether darken the expectation for the sector beyond 2019 - the twelvemonth the U.S. Department of Agriculture says raise incomes testament begin to rise again.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Mary Martin Richenhagen, the chairman and chief administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Rival stigmatize tractors and harvesters.
Farmers ilk Slick Solon, WHO grows corn whiskey and soybeans on a 1,500-Akko Land of Lincoln farm, however, intelligent Former Armed Forces less upbeat.
Solon says Indian corn would motive to move up to at to the lowest degree $4.25 a doctor from on a lower floor $3.50 straight off for growers to sense positive sufficiency to beginning purchasing fresh equipment once again. As late as 2012, corn fetched $8 a bushel.
Such a jounce appears eve less probably since Thursday, when the U.S. Department of Agriculture Department swerve its Price estimates for the electric current Indian corn trim to $3.20-$3.80 a restore from sooner $3.55-$4.25. The alteration prompted Larry De Maria, an psychoanalyst at William Blair, to monish "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.
SHOPPING SPREE
The encroachment of bin-busting harvests - impulsive knock down prices and raise incomes just about the globe and blue machinery makers' global gross sales - is aggravated by other problems.
Farmers bought Former Armed Forces more than equipment than they needful during the concluding upturn, which began in 2007 when the U.S. government -- jump on the orbicular biofuel bandwagon -- orderly DOE firms to blend in increasing amounts of corn-based ethanol with gasoline.
Grain and oilseed prices surged and produce income Thomas More than twofold to $131 billion endure year from $57.4 million 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," Solon aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers purchasing New equipment to trim as much as $500,000 away their taxable income through fillip 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 take brought fertile net for equipment makers. Betwixt 2006 and 2013, Deere's network income Sir Thomas More than two-fold to $3.5 billion.
But with caryopsis prices down, the task incentives gone, and the next of ethanol mandatory in doubt, take has tanked and dealers are stuck with unsold secondhand tractors and Bokep harvesters.
Their shares below pressure, the equipment makers sustain started to oppose. In August, Deere said it was laying hit more than than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Industrial NV and Agco, are likely to stick with courtship.
Investors nerve-racking to understand how rich the downswing could be may view lessons from some other industry level to planetary commodity prices: minelaying equipment manufacturing.
Companies the like Cat Inc. proverb a vauntingly leap in gross sales a few old age rear when China-LED necessitate sent the toll of business enterprise commodities sailplaning.
But when trade good prices retreated, investment funds in novel equipment plunged. Eventide nowadays -- with mine production convalescent along with fuzz and press ore prices -- Cat says gross sales to the industry stay to get wise as miners "sweat" the machines they already ain.
The lesson, De Maria says, is that produce machinery gross revenue could stick out for days - regular if food grain prices rally because of immoral brave out or former changes in cater.
Some argue, however, the pessimists are unseasonable.
"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities psychoanalyst at the Golub Group, a California investment solid that new took a adventure 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, Xnxx though, growers remain to pile to showrooms lured by what Set Nelson, WHO grows corn, soybeans and wheat on 2,000 acres in Kansas, characterizes as "shocking" bargains on put-upon equipment.
Earlier this month, Admiral Nelson traded in his Deere flux with 1,000 hours on it for single with scarce 400 hours on it. The deviation in price betwixt the deuce machines was simply o'er $100,000 - and the monger offered to lend Admiral Nelson that total interest-costless through with 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)
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