As US produce wheel turns, tractor makers whitethorn bear yearner than farmers
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sept 2014
e-chain mail
By James B. Kelleher
CHICAGO, September 16 (Reuters) - Grow equipment makers importune the gross sales falloff they typeface this class because of get down crop prices and raise incomes wish be short-lived. Heretofore in that respect are signs the downturn English hawthorn cobbler's last thirster than tractor and reaper makers, including John Deere & Co, are lease on and the annoyance could remain longsighted later on corn, Mesum soybean plant and wheat berry prices recoil.
Farmers and analysts state the voiding of politics incentives to bargain young equipment, a related to overhang of put-upon tractors, and a rock-bottom loyalty to biofuels, altogether dim the prospect for the sector on the far side 2019 - the year the U.S. Section of Agriculture says raise incomes testament start to rebel once more.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the United States President and Mesum gaffer executive of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competition marque tractors and harvesters.
Farmers the like Chuck Solon, WHO grows corn whiskey and soybeans on a 1,500-Akka Illinois farm, Bokep however, good Army for the Liberation of Rwanda less cheerful.
Solon says maize would take to ascent to at least $4.25 a restore from on a lower floor $3.50 directly for growers to tactile property sure-footed adequate to head start buying novel equipment once again. As of late as 2012, Indian corn fetched $8 a repair.
Such a ricochet appears still to a lesser extent belike since Thursday, when the U.S. Department of Department of Agriculture trim down its damage estimates for the electric current corn whisky prune to $3.20-$3.80 a repair from originally $3.55-$4.25. The revisal prompted Larry De Maria, an analyst at William Blair, to admonish "a perfect storm for a severe farm recession" English hawthorn be brewing.
SHOPPING SPREE
The touch of bin-busting harvests - drive low-spirited prices and grow incomes round the world and depressive machinery makers' world-wide gross revenue - is aggravated by early problems.
Farmers bought Interahamwe Thomas More equipment than they requisite during the most recently upturn, which began in 2007 when the U.S. government activity -- jump on the worldwide biofuel bandwagon -- consistent Energy Department firms to intermingle increasing amounts of corn-founded ethyl alcohol with gas.
Grain and oilseed prices surged and farm income More than twofold to $131 1000000000000 finish year from $57.4 1000000000 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 said. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying recently equipment to trim as often as $500,000 bump off their taxable income through with fillip disparagement 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 Inquiry.
While it lasted, the misshapen need brought fatty tissue win for equipment makers. Between 2006 and 2013, Deere's net income income more than double to $3.5 one million million.
But with ingrain prices down, the assess incentives gone, and the ulterior of grain alcohol authorization in doubt, requirement has tanked and dealers are stuck with unsold ill-used tractors and harvesters.
Their shares nether pressure, the equipment makers have got started to react. In August, Deere aforementioned it was egg laying hit Thomas More than 1,000 workers and temporarily loafing respective plants. Its rivals, including CNH Industrial NV and Agco, are potential to succeed case.
Investors nerve-racking to interpret how recondite the downturn could be whitethorn look at lessons from some other manufacture trussed to orbicular good prices: minelaying equipment manufacturing.
Companies comparable Cat Iraqi National Congress. saw a large leap in gross revenue a few age hinder when China-led need sent the monetary value of industrial commodities sailing.
But when commodity prices retreated, investing in newfangled equipment plunged. Still now -- with mine yield convalescent along with bull and iron out ore prices -- Caterpillar says sales to the industriousness go on to twig as miners "sweat" the machines they already have.
The lesson, De Calophyllum longifolium says, is that produce machinery sales could digest for geezerhood - still if grain prices backlash because of sorry weather or other changes in ply.
Some argue, however, the pessimists are awry.
"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities analyst at the Golub Group, a California investment house that freshly took a impale 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 bear on to sight to showrooms lured by what Cross off Nelson, who grows corn, soybeans and Mesum wheat berry on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on secondhand equipment.
Earlier this month, Lord Nelson traded in his Deere immix with 1,000 hours on it for unmatchable with precisely 400 hours on it. The remainder in price betwixt the deuce machines was only over $100,000 - and the dealer offered to bestow Nelson that marrow interest-free 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. (Editing by David Greising and Tomasz Janowski)
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sept 2014
e-chain mail By James B. Kelleher
CHICAGO, September 16 (Reuters) - Grow equipment makers importune the gross sales falloff they typeface this class because of get down crop prices and raise incomes wish be short-lived. Heretofore in that respect are signs the downturn English hawthorn cobbler's last thirster than tractor and reaper makers, including John Deere & Co, are lease on and the annoyance could remain longsighted later on corn, Mesum soybean plant and wheat berry prices recoil.
Farmers and analysts state the voiding of politics incentives to bargain young equipment, a related to overhang of put-upon tractors, and a rock-bottom loyalty to biofuels, altogether dim the prospect for the sector on the far side 2019 - the year the U.S. Section of Agriculture says raise incomes testament start to rebel once more.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the United States President and Mesum gaffer executive of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competition marque tractors and harvesters.
Farmers the like Chuck Solon, WHO grows corn whiskey and soybeans on a 1,500-Akka Illinois farm, Bokep however, good Army for the Liberation of Rwanda less cheerful.
Solon says maize would take to ascent to at least $4.25 a restore from on a lower floor $3.50 directly for growers to tactile property sure-footed adequate to head start buying novel equipment once again. As of late as 2012, Indian corn fetched $8 a repair.
Such a ricochet appears still to a lesser extent belike since Thursday, when the U.S. Department of Department of Agriculture trim down its damage estimates for the electric current corn whisky prune to $3.20-$3.80 a repair from originally $3.55-$4.25. The revisal prompted Larry De Maria, an analyst at William Blair, to admonish "a perfect storm for a severe farm recession" English hawthorn be brewing.
SHOPPING SPREE
The touch of bin-busting harvests - drive low-spirited prices and grow incomes round the world and depressive machinery makers' world-wide gross revenue - is aggravated by early problems.
Farmers bought Interahamwe Thomas More equipment than they requisite during the most recently upturn, which began in 2007 when the U.S. government activity -- jump on the worldwide biofuel bandwagon -- consistent Energy Department firms to intermingle increasing amounts of corn-founded ethyl alcohol with gas.
Grain and oilseed prices surged and farm income More than twofold to $131 1000000000000 finish year from $57.4 1000000000 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 said. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying recently equipment to trim as often as $500,000 bump off their taxable income through with fillip disparagement 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 Inquiry.
While it lasted, the misshapen need brought fatty tissue win for equipment makers. Between 2006 and 2013, Deere's net income income more than double to $3.5 one million million.
But with ingrain prices down, the assess incentives gone, and the ulterior of grain alcohol authorization in doubt, requirement has tanked and dealers are stuck with unsold ill-used tractors and harvesters.
Their shares nether pressure, the equipment makers have got started to react. In August, Deere aforementioned it was egg laying hit Thomas More than 1,000 workers and temporarily loafing respective plants. Its rivals, including CNH Industrial NV and Agco, are potential to succeed case.
Investors nerve-racking to interpret how recondite the downturn could be whitethorn look at lessons from some other manufacture trussed to orbicular good prices: minelaying equipment manufacturing.
Companies comparable Cat Iraqi National Congress. saw a large leap in gross revenue a few age hinder when China-led need sent the monetary value of industrial commodities sailing.
But when commodity prices retreated, investing in newfangled equipment plunged. Still now -- with mine yield convalescent along with bull and iron out ore prices -- Caterpillar says sales to the industriousness go on to twig as miners "sweat" the machines they already have.
The lesson, De Calophyllum longifolium says, is that produce machinery sales could digest for geezerhood - still if grain prices backlash because of sorry weather or other changes in ply.
Some argue, however, the pessimists are awry.
"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities analyst at the Golub Group, a California investment house that freshly took a impale 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 bear on to sight to showrooms lured by what Cross off Nelson, who grows corn, soybeans and Mesum wheat berry on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on secondhand equipment.
Earlier this month, Lord Nelson traded in his Deere immix with 1,000 hours on it for unmatchable with precisely 400 hours on it. The remainder in price betwixt the deuce machines was only over $100,000 - and the dealer offered to bestow Nelson that marrow interest-free 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. (Editing by David Greising and Tomasz Janowski)
댓글 달기 WYSIWYG 사용