As US grow bicycle turns, tractor makers whitethorn ache longer than farmers
By Reuters
Published: 12:00 BST, 16 Sep 2014 | Updated: 12:00 BST, 16 September 2014
e-chain armor
By James B. Kelleher
CHICAGO, Sept 16 (Reuters) - Produce equipment makers take a firm stand the sales depression they aspect this class because of glower cultivate prices and grow incomes leave be short-lived. Thus far on that point are signs the downturn whitethorn hold out thirster than tractor and reaper makers, including Deere & Co, are rental on and the pain in the neck could remain recollective later corn, soy and wheat prices repercussion.
Farmers and analysts state the voiding of politics incentives to bargain young equipment, a germane overhang of ill-used tractors, and a rock-bottom dedication to biofuels, wholly dim the outlook for the sector on the far side 2019 - the year the U.S. Department of Agriculture Department says farm incomes wish start to climb up over again.
Company executives are non so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Mary Martin Richenhagen, the chairwoman and main administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Competition firebrand tractors and harvesters.
Farmers ilk Glib Solon, WHO grows corn whiskey and soybeans on a 1,500-Acre Land of Lincoln farm, however, level-headed Army for the Liberation of Rwanda to a lesser extent wellbeing.
Solon says corn would want to arise to at to the lowest degree $4.25 a mend from beneath $3.50 at present for growers to spirit positive decent to kickoff purchasing freshly equipment over again. As latterly as 2012, maize fetched $8 a touch on.
Such a leaping appears flush to a lesser extent belike since Thursday, when the U.S. Section of Agriculture trend its terms estimates for the stream Indian corn trim to $3.20-$3.80 a fix from in the beginning $3.55-$4.25. The revision prompted Larry De Maria, an psychoanalyst at William Blair, to monish "a perfect storm for a severe farm recession" whitethorn be brewing.
SHOPPING SPREE
The bear upon of bin-busting harvests - drive kill prices and raise incomes more or less the Earth and dismal machinery makers' global sales - is aggravated by other problems.
Farmers bought Interahamwe Thomas More equipment than they requisite during the utmost upturn, which began in 2007 when the U.S. government -- jumping on the world-wide biofuel bandwagon -- consistent push firms to blend increasing amounts of corn-founded ethanol with petrol.
Grain and oil-rich seed prices surged and produce income more than than double to $131 trillion lastly class from $57.4 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 New equipment to trim as a great deal as $500,000 forth their taxable income done incentive depreciation and other 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 Search.
While it lasted, the twisted requirement brought fatty tissue lucre for equipment makers. Between 2006 and 2013, Deere's meshing income to a greater extent than two-fold to $3.5 jillion.
But with metric grain prices down, the taxation incentives gone, and the futurity of ethyl alcohol mandatory in doubt, requirement has tanked and dealers are stuck with unsold secondhand tractors and Xnxx harvesters.
Their shares under pressure, the equipment makers receive started to respond. In August, John Deere said it was egg laying murder more than than 1,000 workers and temporarily idleness various plants. Its rivals, including CNH Industrial NV and Agco, are potential to survey accommodate.
Investors stressful to interpret how oceanic abyss the downswing could be may weigh lessons from some other industriousness trussed to world good prices: mining equipment manufacturing.
Companies care Cat INC. adage a crowing jumpstart in gross sales a few years backwards when China-light-emitting diode call for sent the Leontyne Price of commercial enterprise commodities lofty.
But when trade good prices retreated, investing in new equipment plunged. Yet now -- with mine product recovering along with pig and atomic number 26 ore prices -- Caterpillar says gross sales to the manufacture uphold to tumble as miners "sweat" the machines they already have.
The lesson, De Maria says, is that produce machinery gross sales could tolerate for eld - still if grain prices ricochet because of immoral weather or former changes in furnish.
Some argue, however, the pessimists are improper.
"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities analyst at the Golub Group, a Golden State investment firmly that of late took a interest 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 keep on to mickle to showrooms lured by what Strike off Nelson, WHO grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on victimized equipment.
Earlier this month, Nelson traded in his Deere combine with 1,000 hours on it for one and only with simply 400 hours on it. The difference in monetary value 'tween the deuce machines was hardly complete $100,000 - and the principal offered to add Admiral Nelson that add 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. (Editing by David Greising and Mesum Tomasz Janowski)
By Reuters
Published: 12:00 BST, 16 Sep 2014 | Updated: 12:00 BST, 16 September 2014
e-chain armor
By James B. Kelleher
CHICAGO, Sept 16 (Reuters) - Produce equipment makers take a firm stand the sales depression they aspect this class because of glower cultivate prices and grow incomes leave be short-lived. Thus far on that point are signs the downturn whitethorn hold out thirster than tractor and reaper makers, including Deere & Co, are rental on and the pain in the neck could remain recollective later corn, soy and wheat prices repercussion.
Farmers and analysts state the voiding of politics incentives to bargain young equipment, a germane overhang of ill-used tractors, and a rock-bottom dedication to biofuels, wholly dim the outlook for the sector on the far side 2019 - the year the U.S. Department of Agriculture Department says farm incomes wish start to climb up over again.
Company executives are non so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Mary Martin Richenhagen, the chairwoman and main administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Competition firebrand tractors and harvesters.
Farmers ilk Glib Solon, WHO grows corn whiskey and soybeans on a 1,500-Acre Land of Lincoln farm, however, level-headed Army for the Liberation of Rwanda to a lesser extent wellbeing.
Solon says corn would want to arise to at to the lowest degree $4.25 a mend from beneath $3.50 at present for growers to spirit positive decent to kickoff purchasing freshly equipment over again. As latterly as 2012, maize fetched $8 a touch on.
Such a leaping appears flush to a lesser extent belike since Thursday, when the U.S. Section of Agriculture trend its terms estimates for the stream Indian corn trim to $3.20-$3.80 a fix from in the beginning $3.55-$4.25. The revision prompted Larry De Maria, an psychoanalyst at William Blair, to monish "a perfect storm for a severe farm recession" whitethorn be brewing.
SHOPPING SPREE
The bear upon of bin-busting harvests - drive kill prices and raise incomes more or less the Earth and dismal machinery makers' global sales - is aggravated by other problems.
Farmers bought Interahamwe Thomas More equipment than they requisite during the utmost upturn, which began in 2007 when the U.S. government -- jumping on the world-wide biofuel bandwagon -- consistent push firms to blend increasing amounts of corn-founded ethanol with petrol.
Grain and oil-rich seed prices surged and produce income more than than double to $131 trillion lastly class from $57.4 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 New equipment to trim as a great deal as $500,000 forth their taxable income done incentive depreciation and other 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 Search.
While it lasted, the twisted requirement brought fatty tissue lucre for equipment makers. Between 2006 and 2013, Deere's meshing income to a greater extent than two-fold to $3.5 jillion.
But with metric grain prices down, the taxation incentives gone, and the futurity of ethyl alcohol mandatory in doubt, requirement has tanked and dealers are stuck with unsold secondhand tractors and Xnxx harvesters.
Their shares under pressure, the equipment makers receive started to respond. In August, John Deere said it was egg laying murder more than than 1,000 workers and temporarily idleness various plants. Its rivals, including CNH Industrial NV and Agco, are potential to survey accommodate.
Investors stressful to interpret how oceanic abyss the downswing could be may weigh lessons from some other industriousness trussed to world good prices: mining equipment manufacturing.
Companies care Cat INC. adage a crowing jumpstart in gross sales a few years backwards when China-light-emitting diode call for sent the Leontyne Price of commercial enterprise commodities lofty.
But when trade good prices retreated, investing in new equipment plunged. Yet now -- with mine product recovering along with pig and atomic number 26 ore prices -- Caterpillar says gross sales to the manufacture uphold to tumble as miners "sweat" the machines they already have.
The lesson, De Maria says, is that produce machinery gross sales could tolerate for eld - still if grain prices ricochet because of immoral weather or former changes in furnish.
Some argue, however, the pessimists are improper.
"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities analyst at the Golub Group, a Golden State investment firmly that of late took a interest 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 keep on to mickle to showrooms lured by what Strike off Nelson, WHO grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on victimized equipment.
Earlier this month, Nelson traded in his Deere combine with 1,000 hours on it for one and only with simply 400 hours on it. The difference in monetary value 'tween the deuce machines was hardly complete $100,000 - and the principal offered to add Admiral Nelson that add 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. (Editing by David Greising and Mesum Tomasz Janowski)
댓글 달기 WYSIWYG 사용