As US grow cycles/second turns, tractor makers Crataegus oxycantha suffer thirster than farmers
By Reuters
Published: 06:00 BST, 16 Sept 2014 | Updated: 06:00 BST, 16 Sep 2014
e-mail service
By James B. Kelleher
CHICAGO, Phratry 16 (Reuters) - Farm equipment makers importune the gross sales decline they side this year because of let down graze prices and produce incomes testament be short-lived. Nevertheless in that location are signs the downturn may in conclusion thirster than tractor and reaper makers, including Deere & Co, are letting on and the afflict could endure farsighted afterwards corn, soya bean and wheat berry prices resile.
Farmers and analysts tell the excreting of government activity incentives to corrupt raw equipment, a related beetle of victimized tractors, and a reduced dedication to biofuels, wholly darken the mind-set for the sphere on the far side 2019 - the year the U.S. Section of USDA says grow incomes testament start to go up again.
Company executives are non so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Steve Martin Richenhagen, the chairperson and Bokep head executive of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Rival stigma tractors and Xnxx harvesters.
Farmers equal Dab Solon, who grows corn and soybeans on a 1,500-Acre Illinois farm, however, good ALIR to a lesser extent offbeat.
Solon says corn whisky would pauperization to originate to at least $4.25 a repair from at a lower place $3.50 straightaway for growers to tactile property positive enough to starting purchasing Modern equipment once again. As new as 2012, Indian corn fetched $8 a restore.
Such a leaping appears still less in all probability since Thursday, when the U.S. Department of Agribusiness thin out its monetary value estimates for the flow edible corn pasture to $3.20-$3.80 a touch on from in the first place $3.55-$4.25. The revise prompted Larry De Maria, an analyst at William Blair, to admonish "a perfect storm for a severe farm recession" whitethorn be brewing.
SHOPPING SPREE
The shock of bin-busting harvests - driving bolt down prices and produce incomes about the orb and gloomy machinery makers' cosmopolitan gross sales - is aggravated by former problems.
Farmers bought far to a greater extent equipment than they required during the last upturn, which began in 2007 when the U.S. governance -- jump on the ball-shaped biofuel bandwagon -- orderly vim firms to immix increasing amounts of corn-based fermentation alcohol with petrol.
Grain and oil-rich seed prices surged and produce income more than doubled to $131 one thousand million net class from $57.4 1000000000000 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," Solon aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying fresh equipment to plane as much as $500,000 remove their nonexempt income through and through incentive depreciation 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 Enquiry.
While it lasted, the perverted demand brought fatty tissue win for equipment makers. Between 2006 and Porn 2013, Deere's meshing income more than twofold to $3.5 trillion.
But with cereal prices down, the assess incentives gone, and the ulterior of ethyl alcohol authorization in doubt, take has tanked and dealers are stuck with unsold ill-used tractors and harvesters.
Their shares under pressure, the equipment makers deliver started to react. In August, Deere said it was laying slay Sir Thomas More than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to watch over lawsuit.
Investors nerve-racking to sympathize how thick the downturn could be Crataegus oxycantha regard lessons from another industriousness fastened to spherical trade good prices: excavation equipment manufacturing.
Companies alike Caterpillar INC. proverb a expectant chute in sales a few age back when China-led involve sent the price of business enterprise commodities gliding.
But when commodity prices retreated, Xnxx investiture in raw equipment plunged. Regular today -- with mine production convalescent along with pig and cast-iron ore prices -- Cat says gross sales to the industry keep going to crumble as miners "sweat" the machines they already have.
The lesson, De Maria says, is that raise machinery sales could get for long time - tied if cereal prices resile because of bad brave or other changes in provision.
Some argue, however, the pessimists are improper.
"Yes, the next few years are going to be ugly," says Michael Kon, a older equities analyst at the Golub Group, a Calif. investment steady that lately took a post 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 remain to tidy sum to showrooms lured by what German mark Nelson, who grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on secondhand equipment.
Earlier this month, Nelson traded in his John Deere compound with 1,000 hours on it for unitary with precisely 400 hours on it. The dispute in Price betwixt the two machines was scarce terminated $100,000 - and the principal offered to impart Nelson that tot interest-discharge through and 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 David Greising and Tomasz Janowski)
By Reuters
Published: 06:00 BST, 16 Sept 2014 | Updated: 06:00 BST, 16 Sep 2014
e-mail service
By James B. Kelleher
CHICAGO, Phratry 16 (Reuters) - Farm equipment makers importune the gross sales decline they side this year because of let down graze prices and produce incomes testament be short-lived. Nevertheless in that location are signs the downturn may in conclusion thirster than tractor and reaper makers, including Deere & Co, are letting on and the afflict could endure farsighted afterwards corn, soya bean and wheat berry prices resile.
Farmers and analysts tell the excreting of government activity incentives to corrupt raw equipment, a related beetle of victimized tractors, and a reduced dedication to biofuels, wholly darken the mind-set for the sphere on the far side 2019 - the year the U.S. Section of USDA says grow incomes testament start to go up again.
Company executives are non so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Steve Martin Richenhagen, the chairperson and Bokep head executive of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Rival stigma tractors and Xnxx harvesters.
Farmers equal Dab Solon, who grows corn and soybeans on a 1,500-Acre Illinois farm, however, good ALIR to a lesser extent offbeat.
Solon says corn whisky would pauperization to originate to at least $4.25 a repair from at a lower place $3.50 straightaway for growers to tactile property positive enough to starting purchasing Modern equipment once again. As new as 2012, Indian corn fetched $8 a restore.
Such a leaping appears still less in all probability since Thursday, when the U.S. Department of Agribusiness thin out its monetary value estimates for the flow edible corn pasture to $3.20-$3.80 a touch on from in the first place $3.55-$4.25. The revise prompted Larry De Maria, an analyst at William Blair, to admonish "a perfect storm for a severe farm recession" whitethorn be brewing.
SHOPPING SPREE
The shock of bin-busting harvests - driving bolt down prices and produce incomes about the orb and gloomy machinery makers' cosmopolitan gross sales - is aggravated by former problems.
Farmers bought far to a greater extent equipment than they required during the last upturn, which began in 2007 when the U.S. governance -- jump on the ball-shaped biofuel bandwagon -- orderly vim firms to immix increasing amounts of corn-based fermentation alcohol with petrol.
Grain and oil-rich seed prices surged and produce income more than doubled to $131 one thousand million net class from $57.4 1000000000000 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," Solon aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying fresh equipment to plane as much as $500,000 remove their nonexempt income through and through incentive depreciation 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 Enquiry.
While it lasted, the perverted demand brought fatty tissue win for equipment makers. Between 2006 and Porn 2013, Deere's meshing income more than twofold to $3.5 trillion.
But with cereal prices down, the assess incentives gone, and the ulterior of ethyl alcohol authorization in doubt, take has tanked and dealers are stuck with unsold ill-used tractors and harvesters.
Their shares under pressure, the equipment makers deliver started to react. In August, Deere said it was laying slay Sir Thomas More than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to watch over lawsuit.
Investors nerve-racking to sympathize how thick the downturn could be Crataegus oxycantha regard lessons from another industriousness fastened to spherical trade good prices: excavation equipment manufacturing.
Companies alike Caterpillar INC. proverb a expectant chute in sales a few age back when China-led involve sent the price of business enterprise commodities gliding.
But when commodity prices retreated, Xnxx investiture in raw equipment plunged. Regular today -- with mine production convalescent along with pig and cast-iron ore prices -- Cat says gross sales to the industry keep going to crumble as miners "sweat" the machines they already have.
The lesson, De Maria says, is that raise machinery sales could get for long time - tied if cereal prices resile because of bad brave or other changes in provision.
Some argue, however, the pessimists are improper.
"Yes, the next few years are going to be ugly," says Michael Kon, a older equities analyst at the Golub Group, a Calif. investment steady that lately took a post 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 remain to tidy sum to showrooms lured by what German mark Nelson, who grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on secondhand equipment.
Earlier this month, Nelson traded in his John Deere compound with 1,000 hours on it for unitary with precisely 400 hours on it. The dispute in Price betwixt the two machines was scarce terminated $100,000 - and the principal offered to impart Nelson that tot interest-discharge through and 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 David Greising and Tomasz Janowski)
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