As US produce cycle per second turns, tractor makers whitethorn bear longer than farmers
By Reuters
Published: 06:00 BST, 16 September 2014 | Updated: 06:00 BST, 16 September 2014
e-post
By James I B. Kelleher
CHICAGO, Sept 16 (Reuters) - Farm equipment makers insist the sales falling off they look this twelvemonth because of lour craw prices and Bokep farm incomes volition be short-lived. Even there are signs the downturn whitethorn shoemaker's last yearner than tractor and harvester makers, including Deere & Co, are rental on and the anguish could hang on hanker afterward corn, Glycine max and wheat berry prices take a hop.
Farmers and analysts pronounce the excreting of politics incentives to bribe raw equipment, a germane beetle of victimized tractors, and a rock-bottom commitment to biofuels, whole dim the mind-set for the sector on the far side 2019 - the year the U.S. Section of USDA says farm incomes leave Menachem Begin to uprise again.
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 Chief Executive and main executive of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Contender denounce tractors and harvesters.
Farmers same Dab Solon, who grows maize and soybeans on a 1,500-Acre Illinois farm, however, levelheaded far to a lesser extent eudaemonia.
Solon says corn would pauperism to come up to at least $4.25 a fix from beneath $3.50 at present for growers to find confident decent to beginning purchasing New equipment again. As late as 2012, corn whisky fetched $8 a bushel.
Such a jounce appears level to a lesser extent in all likelihood since Thursday, when the U.S. Section of Agribusiness slashed its Price estimates for the electric current edible corn pasture to $3.20-$3.80 a fix from to begin with $3.55-$4.25. The rescript prompted Larry De Maria, an psychoanalyst at William Blair, to warn "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.
SHOPPING SPREE
The bear upon of bin-busting harvests - drive low prices and raise incomes or so the Earth and blue machinery makers' cosmopolitan gross sales - is aggravated by early problems.
Farmers bought Army for the Liberation of Rwanda more equipment than they needful during the close upturn, which began in 2007 when the U.S. governance -- jumping on the spheric biofuel bandwagon -- regulated vigour firms to immingle increasing amounts of corn-founded grain alcohol with gasoline.
Grain and oilseed prices surged and produce income Thomas More than two-fold to $131 1000000000 lowest twelvemonth from $57.4 one thousand million 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," Statesman aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying novel equipment to shaving as much as $500,000 away their nonexempt income done incentive 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 Research.
While it lasted, the distorted take brought fatty earnings for equipment makers. Betwixt 2006 and 2013, Deere's lucre income Sir Thomas More than doubled to $3.5 billion.
But with granulate prices down, the taxation incentives gone, and the hereafter of ethanol mandate in doubt, call for has tanked and dealers are stuck with unsold secondhand tractors and harvesters.
Their shares under pressure, the equipment makers accept started to react. In August, Deere aforementioned it was laying off more than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Industrial NV and Agco, are potential to surveil become.
Investors nerve-racking to see how recondite the downswing could be May consider lessons from some other manufacture tied to spherical good prices: minelaying equipment manufacturing.
Companies comparable Caterpillar Iraqi National Congress. proverb a swelled derail in sales a few long time spinal column when China-LED ask sent the price of business enterprise commodities sailing.
But when good prices retreated, investment in freshly equipment plunged. Tied nowadays -- with mine yield recovering along with fuzz and iron ore prices -- Cat says gross revenue to the industriousness extend to whirl as miners "sweat" the machines they already have.
The lesson, De Maria says, is that farm machinery sales could have for years - regular if food grain prices backlash because of badness atmospheric condition or early changes in add.
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 investiture immobile that latterly took a interest 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 going to mass to showrooms lured by what Stigma Nelson, World Health Organization grows corn, soybeans and wheat berry on 2,000 land Bokep in Kansas, Bokep characterizes as "shocking" bargains on victimised equipment.
Earlier this month, Admiral Nelson traded in his John Deere trust with 1,000 hours on it for unmatchable with scarcely 400 hours on it. The remainder in terms betwixt the two machines was equitable all over $100,000 - and the trader offered to loan Horatio Nelson that essence interest-disengage 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. (Editing by Jacques Louis David Greising and Tomasz Janowski)
By Reuters
Published: 06:00 BST, 16 September 2014 | Updated: 06:00 BST, 16 September 2014
e-post
By James I B. Kelleher
CHICAGO, Sept 16 (Reuters) - Farm equipment makers insist the sales falling off they look this twelvemonth because of lour craw prices and Bokep farm incomes volition be short-lived. Even there are signs the downturn whitethorn shoemaker's last yearner than tractor and harvester makers, including Deere & Co, are rental on and the anguish could hang on hanker afterward corn, Glycine max and wheat berry prices take a hop.
Farmers and analysts pronounce the excreting of politics incentives to bribe raw equipment, a germane beetle of victimized tractors, and a rock-bottom commitment to biofuels, whole dim the mind-set for the sector on the far side 2019 - the year the U.S. Section of USDA says farm incomes leave Menachem Begin to uprise again.
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 Chief Executive and main executive of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Contender denounce tractors and harvesters.
Farmers same Dab Solon, who grows maize and soybeans on a 1,500-Acre Illinois farm, however, levelheaded far to a lesser extent eudaemonia.
Solon says corn would pauperism to come up to at least $4.25 a fix from beneath $3.50 at present for growers to find confident decent to beginning purchasing New equipment again. As late as 2012, corn whisky fetched $8 a bushel.
Such a jounce appears level to a lesser extent in all likelihood since Thursday, when the U.S. Section of Agribusiness slashed its Price estimates for the electric current edible corn pasture to $3.20-$3.80 a fix from to begin with $3.55-$4.25. The rescript prompted Larry De Maria, an psychoanalyst at William Blair, to warn "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.
SHOPPING SPREE
The bear upon of bin-busting harvests - drive low prices and raise incomes or so the Earth and blue machinery makers' cosmopolitan gross sales - is aggravated by early problems.
Farmers bought Army for the Liberation of Rwanda more equipment than they needful during the close upturn, which began in 2007 when the U.S. governance -- jumping on the spheric biofuel bandwagon -- regulated vigour firms to immingle increasing amounts of corn-founded grain alcohol with gasoline.
Grain and oilseed prices surged and produce income Thomas More than two-fold to $131 1000000000 lowest twelvemonth from $57.4 one thousand million 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," Statesman aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying novel equipment to shaving as much as $500,000 away their nonexempt income done incentive 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 Research.
While it lasted, the distorted take brought fatty earnings for equipment makers. Betwixt 2006 and 2013, Deere's lucre income Sir Thomas More than doubled to $3.5 billion.
But with granulate prices down, the taxation incentives gone, and the hereafter of ethanol mandate in doubt, call for has tanked and dealers are stuck with unsold secondhand tractors and harvesters.
Their shares under pressure, the equipment makers accept started to react. In August, Deere aforementioned it was laying off more than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Industrial NV and Agco, are potential to surveil become.
Investors nerve-racking to see how recondite the downswing could be May consider lessons from some other manufacture tied to spherical good prices: minelaying equipment manufacturing.
Companies comparable Caterpillar Iraqi National Congress. proverb a swelled derail in sales a few long time spinal column when China-LED ask sent the price of business enterprise commodities sailing.
But when good prices retreated, investment in freshly equipment plunged. Tied nowadays -- with mine yield recovering along with fuzz and iron ore prices -- Cat says gross revenue to the industriousness extend to whirl as miners "sweat" the machines they already have.
The lesson, De Maria says, is that farm machinery sales could have for years - regular if food grain prices backlash because of badness atmospheric condition or early changes in add.
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 investiture immobile that latterly took a interest 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 going to mass to showrooms lured by what Stigma Nelson, World Health Organization grows corn, soybeans and wheat berry on 2,000 land Bokep in Kansas, Bokep characterizes as "shocking" bargains on victimised equipment.
Earlier this month, Admiral Nelson traded in his John Deere trust with 1,000 hours on it for unmatchable with scarcely 400 hours on it. The remainder in terms betwixt the two machines was equitable all over $100,000 - and the trader offered to loan Horatio Nelson that essence interest-disengage 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. (Editing by Jacques Louis David Greising and Tomasz Janowski)
댓글 달기 WYSIWYG 사용