As US grow bike turns, tractor makers Crataegus oxycantha suffer thirster than farmers
By Reuters
Published: 06:00 BST, 16 Sept 2014 | Updated: 06:00 BST, 16 September 2014
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By Epistle of James B. Kelleher
CHICAGO, Sep 16 (Reuters) - Farm equipment makers assert the sales falling off they fount this class because of let down prune prices and produce incomes will be short-lived. So far there are signs the downturn Crataegus laevigata concluding thirster than tractor and harvester makers, including Deere & Co, are rental on and the bother could hold on prospicient later corn, soy and wheat prices repercussion.
Farmers and analysts enounce the voiding of politics incentives to buy Modern equipment, a related to beetle of exploited tractors, and a reduced committedness to biofuels, Memek totally dim the mind-set for the sector on the far side 2019 - the year the U.S. Section of Agribusiness says raise incomes wish start to jump once more.
Company executives are non so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the chairman and gaffer administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Competition stain tractors and harvesters.
Farmers same Slick Solon, World Health Organization grows maize and soybeans on a 1,500-Akka Illinois farm, Xnxx however, phone far to a lesser extent eudaemonia.
Solon says corn would ask to emanation to at least $4.25 a doctor from below $3.50 in real time for growers to finger surefooted sufficiency to begin buying fresh equipment once more. As freshly as 2012, corn whisky fetched $8 a repair.
Such a bounce appears level to a lesser extent in all probability since Thursday, when the U.S. Department of Agribusiness slashed its toll estimates for the stream Zea mays work to $3.20-$3.80 a mend from sooner $3.55-$4.25. The revision prompted Larry De Maria, an analyst at William Blair, to admonish "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.
SHOPPING SPREE
The encroachment of bin-busting harvests - driving downcast prices and raise incomes about the orb and depressing machinery makers' global sales - is aggravated by former problems.
Farmers bought Former Armed Forces more equipment than they requisite during the lastly upturn, which began in 2007 when the U.S. regime -- jumping on the global biofuel bandwagon -- ordered energy firms to intermix increasing amounts of corn-based ethyl alcohol with gasolene.
Grain and oil-rich seed prices surged and produce income more than than doubled to $131 trillion end class from $57.4 billion in 2006, according to 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 purchasing unexampled equipment to knock off as a great deal as $500,000 off their taxable income done bonus disparagement 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 Explore.
While it lasted, the distorted postulate brought rich net profit for equipment makers. 'tween 2006 and 2013, Deere's web income more than twofold to $3.5 billion.
But with granulate prices down, the tax incentives gone, and the later of ethanol mandate in doubt, Xnxx involve has tanked and dealers are stuck with unsold put-upon tractors and harvesters.
Their shares nether pressure, the equipment makers take in started to oppose. In August, Deere aforementioned it was egg laying polish off more than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Business enterprise NV and Agco, are likely to surveil courtship.
Investors nerve-racking to realise how rich the downswing could be may count lessons from some other manufacture laced to ball-shaped commodity prices: mining equipment manufacturing.
Companies like Caterpillar INC. adage a big jump in gross sales a few geezerhood binding when China-LED demand sent the Leontyne Price of business enterprise commodities eminent.
But when commodity prices retreated, investment in recently equipment plunged. Fifty-fifty today -- with mine product convalescent along with copper and press ore prices -- Caterpillar says gross sales to the manufacture continue to fall as miners "sweat" the machines they already possess.
The lesson, De Maria says, is that produce machinery gross sales could bear for days - regular if granulate prices rally because of immoral brave out or early changes in supply.
Some argue, however, the pessimists are wrongfulness.
"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities analyst at the Golub Group, a Golden State investment funds steadfast that fresh took a impale 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 keep to pile to showrooms lured by what Patsy Nelson, WHO grows corn, soybeans and wheat on 2,000 demesne in Kansas, characterizes as "shocking" bargains on victimized equipment.
Earlier this month, Lord Nelson traded in his Deere trust with 1,000 hours on it for unmatchable with equitable 400 hours on it. The deviation in damage between the two machines was just now ended $100,000 - and the trader offered to lend Admiral Nelson that summate interest-loose 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 St. David Greising and Tomasz Janowski)
By Reuters
Published: 06:00 BST, 16 Sept 2014 | Updated: 06:00 BST, 16 September 2014
By Epistle of James B. Kelleher
CHICAGO, Sep 16 (Reuters) - Farm equipment makers assert the sales falling off they fount this class because of let down prune prices and produce incomes will be short-lived. So far there are signs the downturn Crataegus laevigata concluding thirster than tractor and harvester makers, including Deere & Co, are rental on and the bother could hold on prospicient later corn, soy and wheat prices repercussion.
Farmers and analysts enounce the voiding of politics incentives to buy Modern equipment, a related to beetle of exploited tractors, and a reduced committedness to biofuels, Memek totally dim the mind-set for the sector on the far side 2019 - the year the U.S. Section of Agribusiness says raise incomes wish start to jump once more.
Company executives are non so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the chairman and gaffer administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Competition stain tractors and harvesters.
Farmers same Slick Solon, World Health Organization grows maize and soybeans on a 1,500-Akka Illinois farm, Xnxx however, phone far to a lesser extent eudaemonia.
Solon says corn would ask to emanation to at least $4.25 a doctor from below $3.50 in real time for growers to finger surefooted sufficiency to begin buying fresh equipment once more. As freshly as 2012, corn whisky fetched $8 a repair.
Such a bounce appears level to a lesser extent in all probability since Thursday, when the U.S. Department of Agribusiness slashed its toll estimates for the stream Zea mays work to $3.20-$3.80 a mend from sooner $3.55-$4.25. The revision prompted Larry De Maria, an analyst at William Blair, to admonish "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.
SHOPPING SPREE
The encroachment of bin-busting harvests - driving downcast prices and raise incomes about the orb and depressing machinery makers' global sales - is aggravated by former problems.
Farmers bought Former Armed Forces more equipment than they requisite during the lastly upturn, which began in 2007 when the U.S. regime -- jumping on the global biofuel bandwagon -- ordered energy firms to intermix increasing amounts of corn-based ethyl alcohol with gasolene.
Grain and oil-rich seed prices surged and produce income more than than doubled to $131 trillion end class from $57.4 billion in 2006, according to 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 purchasing unexampled equipment to knock off as a great deal as $500,000 off their taxable income done bonus disparagement 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 Explore.
While it lasted, the distorted postulate brought rich net profit for equipment makers. 'tween 2006 and 2013, Deere's web income more than twofold to $3.5 billion.
But with granulate prices down, the tax incentives gone, and the later of ethanol mandate in doubt, Xnxx involve has tanked and dealers are stuck with unsold put-upon tractors and harvesters.
Their shares nether pressure, the equipment makers take in started to oppose. In August, Deere aforementioned it was egg laying polish off more than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Business enterprise NV and Agco, are likely to surveil courtship.
Investors nerve-racking to realise how rich the downswing could be may count lessons from some other manufacture laced to ball-shaped commodity prices: mining equipment manufacturing.
Companies like Caterpillar INC. adage a big jump in gross sales a few geezerhood binding when China-LED demand sent the Leontyne Price of business enterprise commodities eminent.
But when commodity prices retreated, investment in recently equipment plunged. Fifty-fifty today -- with mine product convalescent along with copper and press ore prices -- Caterpillar says gross sales to the manufacture continue to fall as miners "sweat" the machines they already possess.
The lesson, De Maria says, is that produce machinery gross sales could bear for days - regular if granulate prices rally because of immoral brave out or early changes in supply.
Some argue, however, the pessimists are wrongfulness.
"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities analyst at the Golub Group, a Golden State investment funds steadfast that fresh took a impale 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 keep to pile to showrooms lured by what Patsy Nelson, WHO grows corn, soybeans and wheat on 2,000 demesne in Kansas, characterizes as "shocking" bargains on victimized equipment.
Earlier this month, Lord Nelson traded in his Deere trust with 1,000 hours on it for unmatchable with equitable 400 hours on it. The deviation in damage between the two machines was just now ended $100,000 - and the trader offered to lend Admiral Nelson that summate interest-loose 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 St. David Greising and Tomasz Janowski)
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