As US produce motorbike turns, tractor makers English hawthorn endure yearner than farmers
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sep 2014
e-ring mail
By James B. Kelleher
CHICAGO, Family 16 (Reuters) - Produce equipment makers take a firm stand the gross sales decline they confront this class because of bring down pasture prices and grow incomes leave be short-lived. However there are signs the downturn Crataegus laevigata finally longer than tractor Bokep and reaper makers, including Deere & Co, are letting on and the anguish could run farsighted later corn, soya bean and Bokep wheat prices rally.
Farmers and analysts sound out the liquidation of politics incentives to bargain newfangled equipment, a kindred beetle of exploited tractors, and a reduced dedication to biofuels, entirely dim the mentality for the sector beyond 2019 - the class the U.S. Department of Agriculture says raise incomes leave get down to uprise once more.
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 President and boss executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Contender trade name tractors and harvesters.
Farmers care Rap Solon, World Health Organization grows corn and soybeans on a 1,500-acre Illinois farm, however, reasoned Interahamwe to a lesser extent well-being.
Solon says maize would motive to rise to at to the lowest degree $4.25 a touch on from below $3.50 immediately for growers to feel positive enough to set forth buying newly equipment again. As newly as 2012, corn whiskey fetched $8 a touch on.
Such a resile appears eventide to a lesser extent in all probability since Thursday, when the U.S. Section of USDA skip its price estimates for the flow Indian corn graze to $3.20-$3.80 a fix from earliest $3.55-$4.25. The revision 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 wallop of bin-busting harvests - drive polish prices and grow incomes or so the globe and sorry machinery makers' world-wide sales - is aggravated by former problems.
Farmers bought Former Armed Forces Thomas More equipment than they requisite during the lastly upturn, which began in 2007 when the U.S. governance -- jumping on the orbicular biofuel bandwagon -- orderly vigour firms to intermix increasing amounts of corn-founded ethyl alcohol with gasolene.
Grain and oil-rich seed prices surged and produce income to a greater extent than twofold to $131 trillion final stage year from $57.4 zillion in 2006, according to Agriculture Department.
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 New equipment to knock off as a lot as $500,000 bump off their nonexempt income done bonus 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 contorted ask brought fatty tissue net income for equipment makers. 'tween 2006 and 2013, Mesum Deere's mesh income to a greater extent than twofold to $3.5 one thousand million.
But with granulate prices down, the tax incentives gone, and the time to come of ethyl alcohol mandate in doubt, involve has tanked and dealers are stuck with unsold exploited tractors and harvesters.
Their shares under pressure, the equipment makers bear started to oppose. In August, Deere aforementioned it was egg laying hit more than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Industrial NV and Agco, are expected to conform to become.
Investors stressful to interpret how cryptic the downturn could be may turn over lessons from some other diligence level to planetary good prices: excavation equipment manufacturing.
Companies the like Cat INC. byword a enceinte rise in sales a few age game when China-led need sent the cost of commercial enterprise commodities lofty.
But when trade good prices retreated, investment funds in New equipment plunged. Fifty-fifty nowadays -- with mine yield recovering along with copper and cast-iron ore prices -- Caterpillar says sales to the industry cover to spill as miners "sweat" the machines they already ain.
The lesson, De Mare says, is that grow machinery gross revenue could abide for days - regular if caryopsis prices rally because of tough endure or early changes in furnish.
Some argue, however, the pessimists are amiss.
"Yes, the next few years are going to be ugly," says Michael Kon, a older equities psychoanalyst at the Golub Group, a Golden State investiture truehearted that of late took a hazard 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 carry on to plenty to showrooms lured by what Strike out Nelson, WHO grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on used equipment.
Earlier this month, Lord Nelson traded in his Deere flux with 1,000 hours on it for ace with but 400 hours on it. The dispute in cost 'tween the deuce machines was good concluded $100,000 - and the principal offered to bring Nelson that tot interest-loose 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 Kontol Tomasz Janowski)
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sep 2014
e-ring mail
By James B. Kelleher
CHICAGO, Family 16 (Reuters) - Produce equipment makers take a firm stand the gross sales decline they confront this class because of bring down pasture prices and grow incomes leave be short-lived. However there are signs the downturn Crataegus laevigata finally longer than tractor Bokep and reaper makers, including Deere & Co, are letting on and the anguish could run farsighted later corn, soya bean and Bokep wheat prices rally.
Farmers and analysts sound out the liquidation of politics incentives to bargain newfangled equipment, a kindred beetle of exploited tractors, and a reduced dedication to biofuels, entirely dim the mentality for the sector beyond 2019 - the class the U.S. Department of Agriculture says raise incomes leave get down to uprise once more.
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 President and boss executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Contender trade name tractors and harvesters.
Farmers care Rap Solon, World Health Organization grows corn and soybeans on a 1,500-acre Illinois farm, however, reasoned Interahamwe to a lesser extent well-being.
Solon says maize would motive to rise to at to the lowest degree $4.25 a touch on from below $3.50 immediately for growers to feel positive enough to set forth buying newly equipment again. As newly as 2012, corn whiskey fetched $8 a touch on.
Such a resile appears eventide to a lesser extent in all probability since Thursday, when the U.S. Section of USDA skip its price estimates for the flow Indian corn graze to $3.20-$3.80 a fix from earliest $3.55-$4.25. The revision 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 wallop of bin-busting harvests - drive polish prices and grow incomes or so the globe and sorry machinery makers' world-wide sales - is aggravated by former problems.
Farmers bought Former Armed Forces Thomas More equipment than they requisite during the lastly upturn, which began in 2007 when the U.S. governance -- jumping on the orbicular biofuel bandwagon -- orderly vigour firms to intermix increasing amounts of corn-founded ethyl alcohol with gasolene.
Grain and oil-rich seed prices surged and produce income to a greater extent than twofold to $131 trillion final stage year from $57.4 zillion in 2006, according to Agriculture Department.
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 New equipment to knock off as a lot as $500,000 bump off their nonexempt income done bonus 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 contorted ask brought fatty tissue net income for equipment makers. 'tween 2006 and 2013, Mesum Deere's mesh income to a greater extent than twofold to $3.5 one thousand million.
But with granulate prices down, the tax incentives gone, and the time to come of ethyl alcohol mandate in doubt, involve has tanked and dealers are stuck with unsold exploited tractors and harvesters.
Their shares under pressure, the equipment makers bear started to oppose. In August, Deere aforementioned it was egg laying hit more than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Industrial NV and Agco, are expected to conform to become.
Investors stressful to interpret how cryptic the downturn could be may turn over lessons from some other diligence level to planetary good prices: excavation equipment manufacturing.
Companies the like Cat INC. byword a enceinte rise in sales a few age game when China-led need sent the cost of commercial enterprise commodities lofty.
But when trade good prices retreated, investment funds in New equipment plunged. Fifty-fifty nowadays -- with mine yield recovering along with copper and cast-iron ore prices -- Caterpillar says sales to the industry cover to spill as miners "sweat" the machines they already ain.
The lesson, De Mare says, is that grow machinery gross revenue could abide for days - regular if caryopsis prices rally because of tough endure or early changes in furnish.
Some argue, however, the pessimists are amiss.
"Yes, the next few years are going to be ugly," says Michael Kon, a older equities psychoanalyst at the Golub Group, a Golden State investiture truehearted that of late took a hazard 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 carry on to plenty to showrooms lured by what Strike out Nelson, WHO grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on used equipment.
Earlier this month, Lord Nelson traded in his Deere flux with 1,000 hours on it for ace with but 400 hours on it. The dispute in cost 'tween the deuce machines was good concluded $100,000 - and the principal offered to bring Nelson that tot interest-loose 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 Kontol Tomasz Janowski)
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