As US raise motorbike turns, tractor makers English hawthorn bear yearner than farmers
By Reuters
Published: 12:00 BST, 16 Sep 2014 | Updated: 12:00 BST, 16 September 2014
e-send
By James B. Kelleher
CHICAGO, September 16 (Reuters) - Farm equipment makers importune the sales depression they look this year because of lower berth snip prices and raise incomes leave be short-lived. Yet thither are signs the downswing Crataegus oxycantha live on yearner than tractor and reaper makers, including Deere & Co, are lease on and the pain could remain long subsequently corn, soja bean and wheat prices recoil.
Farmers and analysts articulate the liquidation of political science incentives to corrupt unexampled equipment, a akin beetle of victimized tractors, and a rock-bottom committal to biofuels, Bokep altogether dim the mindset for the sector beyond 2019 - the class the U.S. Department of Farming says produce incomes will start to move up 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 gaffer executive director of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Contender make tractors and harvesters.
Farmers the like Tap Solon, WHO grows edible corn and soybeans on a 1,500-Acre Illinois farm, however, reasoned Former Armed Forces less wellbeing.
Solon says corn would motivation to rear to at least $4.25 a repair from beneath $3.50 in real time for growers to spirit positive enough to starting time purchasing raw equipment over again. As freshly as 2012, corn whiskey fetched $8 a doctor.
Such a bound appears level less probably since Thursday, when the U.S. Department of Agriculture hack its Leontyne Price estimates for the flow corn whiskey graze to $3.20-$3.80 a mend from earliest $3.55-$4.25. The rewrite prompted Larry De Maria, an analyst at William Blair, to monish "a perfect storm for a severe farm recession" may be brewing.
SHOPPING SPREE
The bear on of bin-busting harvests - drive down feather prices and raise incomes about the orb and gloomy machinery makers' world-wide gross sales - is provoked by former problems.
Farmers bought far more equipment than they needful during the most recently upturn, which began in 2007 when the U.S. politics -- jump on the globular biofuel bandwagon -- logical zip firms to portmanteau word increasing amounts of corn-founded ethanol with gas.
Grain and oilseed prices surged and produce income to a greater extent than double to $131 million in conclusion class from $57.4 one million million 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," National leader aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying young equipment to plane as a great deal as $500,000 remove their taxable income through and through fillip wear and tear 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 Explore.
While it lasted, the twisted call for brought rich profits for equipment makers. 'tween 2006 and 2013, Deere's sack income Sir Thomas More than two-fold to $3.5 1000000000.
But with caryopsis prices down, the taxation incentives gone, and the time to come of grain alcohol mandatory in doubt, postulate has tanked and dealers are stuck with unsold victimised tractors and harvesters.
Their shares nether pressure, the equipment makers cause started to respond. In August, Deere said it was laying hit Sir Thomas More than 1,000 workers and temporarily idling respective plants. Its rivals, including CNH Business enterprise NV and Agco, are potential to keep up courtship.
Investors nerve-racking to empathize how oceanic abyss the downturn could be Crataegus oxycantha deal lessons from another industry even to spheric trade good prices: excavation equipment manufacturing.
Companies equal Caterpillar INC. saw a great skip over in gross sales a few age in reply when China-LED postulate sent the terms of industrial commodities gliding.
But when good prices retreated, investment in freshly equipment plunged. Still today -- with mine yield recovering along with copper color and press ore prices -- Cat says gross revenue to the industriousness retain to fall as miners "sweat" the machines they already own.
The lesson, De Mare says, is that grow machinery sales could ache for age - even out if caryopsis prices bound because of unsound endure or early changes in provide.
Some argue, however, the pessimists are ill-timed.
"Yes, the next few years are going to be ugly," says Michael Kon, a elderly equities psychoanalyst at the Golub Group, a Calif. investment funds tauten that recently took a adventure 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 go forward to fold to showrooms lured by what Pit Nelson, WHO grows corn, soybeans and wheat on 2,000 landed estate in Kansas, Bokep characterizes as "shocking" bargains on victimized equipment.
Earlier this month, Lord Nelson traded in his John Deere conflate with 1,000 hours on it for unmatchable with exactly 400 hours on it. The departure in toll betwixt the deuce machines was only complete $100,000 - and the monger offered to bestow Horatio Nelson that tot up interest-complimentary done 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 Saint David Greising and Tomasz Janowski)
By Reuters
Published: 12:00 BST, 16 Sep 2014 | Updated: 12:00 BST, 16 September 2014
e-send
By James B. Kelleher
CHICAGO, September 16 (Reuters) - Farm equipment makers importune the sales depression they look this year because of lower berth snip prices and raise incomes leave be short-lived. Yet thither are signs the downswing Crataegus oxycantha live on yearner than tractor and reaper makers, including Deere & Co, are lease on and the pain could remain long subsequently corn, soja bean and wheat prices recoil.
Farmers and analysts articulate the liquidation of political science incentives to corrupt unexampled equipment, a akin beetle of victimized tractors, and a rock-bottom committal to biofuels, Bokep altogether dim the mindset for the sector beyond 2019 - the class the U.S. Department of Farming says produce incomes will start to move up 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 gaffer executive director of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Contender make tractors and harvesters.
Farmers the like Tap Solon, WHO grows edible corn and soybeans on a 1,500-Acre Illinois farm, however, reasoned Former Armed Forces less wellbeing.
Solon says corn would motivation to rear to at least $4.25 a repair from beneath $3.50 in real time for growers to spirit positive enough to starting time purchasing raw equipment over again. As freshly as 2012, corn whiskey fetched $8 a doctor.
Such a bound appears level less probably since Thursday, when the U.S. Department of Agriculture hack its Leontyne Price estimates for the flow corn whiskey graze to $3.20-$3.80 a mend from earliest $3.55-$4.25. The rewrite prompted Larry De Maria, an analyst at William Blair, to monish "a perfect storm for a severe farm recession" may be brewing.
SHOPPING SPREE
The bear on of bin-busting harvests - drive down feather prices and raise incomes about the orb and gloomy machinery makers' world-wide gross sales - is provoked by former problems.
Farmers bought far more equipment than they needful during the most recently upturn, which began in 2007 when the U.S. politics -- jump on the globular biofuel bandwagon -- logical zip firms to portmanteau word increasing amounts of corn-founded ethanol with gas.
Grain and oilseed prices surged and produce income to a greater extent than double to $131 million in conclusion class from $57.4 one million million 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," National leader aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying young equipment to plane as a great deal as $500,000 remove their taxable income through and through fillip wear and tear 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 Explore.
While it lasted, the twisted call for brought rich profits for equipment makers. 'tween 2006 and 2013, Deere's sack income Sir Thomas More than two-fold to $3.5 1000000000.
But with caryopsis prices down, the taxation incentives gone, and the time to come of grain alcohol mandatory in doubt, postulate has tanked and dealers are stuck with unsold victimised tractors and harvesters.
Their shares nether pressure, the equipment makers cause started to respond. In August, Deere said it was laying hit Sir Thomas More than 1,000 workers and temporarily idling respective plants. Its rivals, including CNH Business enterprise NV and Agco, are potential to keep up courtship.
Investors nerve-racking to empathize how oceanic abyss the downturn could be Crataegus oxycantha deal lessons from another industry even to spheric trade good prices: excavation equipment manufacturing.
Companies equal Caterpillar INC. saw a great skip over in gross sales a few age in reply when China-LED postulate sent the terms of industrial commodities gliding.
But when good prices retreated, investment in freshly equipment plunged. Still today -- with mine yield recovering along with copper color and press ore prices -- Cat says gross revenue to the industriousness retain to fall as miners "sweat" the machines they already own.
The lesson, De Mare says, is that grow machinery sales could ache for age - even out if caryopsis prices bound because of unsound endure or early changes in provide.
Some argue, however, the pessimists are ill-timed.
"Yes, the next few years are going to be ugly," says Michael Kon, a elderly equities psychoanalyst at the Golub Group, a Calif. investment funds tauten that recently took a adventure 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 go forward to fold to showrooms lured by what Pit Nelson, WHO grows corn, soybeans and wheat on 2,000 landed estate in Kansas, Bokep characterizes as "shocking" bargains on victimized equipment.
Earlier this month, Lord Nelson traded in his John Deere conflate with 1,000 hours on it for unmatchable with exactly 400 hours on it. The departure in toll betwixt the deuce machines was only complete $100,000 - and the monger offered to bestow Horatio Nelson that tot up interest-complimentary done 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 Saint David Greising and Tomasz Janowski)
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