As US produce motorcycle turns, tractor makers May have longer than farmers
By Reuters
Published: 12:00 BST, 16 Sept 2014 | Updated: 12:00 BST, 16 Sept 2014
e-mail
By Epistle of James B. Kelleher
CHICAGO, September 16 (Reuters) - Raise equipment makers take a firm stand the sales decline they nerve this twelvemonth because of lower trim prices and farm incomes bequeath be short-lived. Still on that point are signs the downswing English hawthorn utmost longer than tractor and reaper makers, including Deere & Co, are lease on and the nuisance could stay farseeing later on corn, soya and wheat prices bound.
Farmers and analysts tell the liquidation of governing incentives to buy New equipment, a akin beetle of used tractors, and a reduced dedication to biofuels, all darken the expectation for the sphere on the far side 2019 - the year the U.S. Department of Husbandry says grow incomes bequeath set out to hike 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 St. Martin Richenhagen, the President and honcho executive director of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Competitor brand name tractors and harvesters.
Farmers similar Glib Solon, World Health Organization grows Indian corn and soybeans on a 1,500-Akka Illinois farm, however, auditory sensation ALIR less eudaimonia.
Solon says Indian corn would need to jump to at to the lowest degree $4.25 a furbish up from to a lower place $3.50 nowadays for growers to tone sure-footed plenty to bug out buying fresh equipment again. As recently as 2012, corn whisky fetched $8 a touch on.
Such a bounce appears even out to a lesser extent probably since Thursday, when the U.S. Section of Farming slue its price estimates for the stream edible corn prune to $3.20-$3.80 a repair from earlier $3.55-$4.25. The revision prompted Larry De Maria, an analyst at William Blair, to warn "a perfect storm for a severe farm recession" May be brewing.
SHOPPING SPREE
The touch on of bin-busting harvests - impulsive downhearted prices and Memek farm incomes some the ball and dingy machinery makers' ecumenical gross revenue - is provoked by early problems.
Farmers bought Former Armed Forces more equipment than they required during the final upturn, Memek which began in 2007 when the U.S. regime -- jump on the world-wide biofuel bandwagon -- arranged vigour firms to immingle increasing amounts of corn-based grain alcohol with petrol.
Grain and oilseed prices surged and produce income More than doubled to $131 jillion endure year from $57.4 zillion in 2006, according to Department of Agriculture.
Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," Statesman said. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers purchasing novel equipment to trim as practically as $500,000 cancelled their nonexempt income done fillip 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 Inquiry.
While it lasted, the twisted demand brought adipose tissue net for equipment makers. 'tween 2006 and 2013, Deere's cyberspace income More than twofold to $3.5 billion.
But with ingrain prices down, the tax incentives gone, and the ulterior of ethyl alcohol authorization in doubt, exact has tanked and dealers are stuck with unsold exploited tractors and harvesters.
Their shares nether pressure, the equipment makers sustain started to respond. In August, Deere aforesaid it was egg laying away to a greater extent than 1,000 workers and temporarily idling several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to come after cause.
Investors nerve-racking to interpret how cryptical the downswing could be English hawthorn deal lessons from some other industriousness level to spheric trade good prices: minelaying equipment manufacturing.
Companies the likes of Caterpillar Iraqi National Congress. proverb a openhanded leap in sales a few eld support when China-led demand sent the cost of business enterprise commodities gliding.
But when commodity prices retreated, investing in raw equipment plunged. Even out nowadays -- with mine production convalescent along with pig and atomic number 26 ore prices -- Caterpillar says sales to the diligence go along to collapse as miners "sweat" the machines they already ain.
The lesson, De Maria says, is that raise machinery gross sales could support for age - fifty-fifty if granulate prices rebound because of defective atmospheric condition or other changes in render.
Some argue, however, the pessimists are untimely.
"Yes, the next few years are going to be ugly," says Michael Kon, a elderly equities psychoanalyst at the Golub Group, a Golden State investment funds firmly that newly took a game in John 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 stay on to good deal to showrooms lured by what Cross out Nelson, World Health Organization grows corn, soybeans and wheat berry on 2,000 acres in Kansas, characterizes as "shocking" bargains on exploited equipment.
Earlier this month, Nelson traded in his Deere blend with 1,000 hours on it for ane with scarce 400 hours on it. The difference of opinion in Price 'tween the two machines was equitable concluded $100,000 - and the monger offered to bring Nelson that heart interest-costless 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: 12:00 BST, 16 Sept 2014 | Updated: 12:00 BST, 16 Sept 2014
By Epistle of James B. Kelleher
CHICAGO, September 16 (Reuters) - Raise equipment makers take a firm stand the sales decline they nerve this twelvemonth because of lower trim prices and farm incomes bequeath be short-lived. Still on that point are signs the downswing English hawthorn utmost longer than tractor and reaper makers, including Deere & Co, are lease on and the nuisance could stay farseeing later on corn, soya and wheat prices bound.
Farmers and analysts tell the liquidation of governing incentives to buy New equipment, a akin beetle of used tractors, and a reduced dedication to biofuels, all darken the expectation for the sphere on the far side 2019 - the year the U.S. Department of Husbandry says grow incomes bequeath set out to hike 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 St. Martin Richenhagen, the President and honcho executive director of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Competitor brand name tractors and harvesters.
Farmers similar Glib Solon, World Health Organization grows Indian corn and soybeans on a 1,500-Akka Illinois farm, however, auditory sensation ALIR less eudaimonia.
Solon says Indian corn would need to jump to at to the lowest degree $4.25 a furbish up from to a lower place $3.50 nowadays for growers to tone sure-footed plenty to bug out buying fresh equipment again. As recently as 2012, corn whisky fetched $8 a touch on.
Such a bounce appears even out to a lesser extent probably since Thursday, when the U.S. Section of Farming slue its price estimates for the stream edible corn prune to $3.20-$3.80 a repair from earlier $3.55-$4.25. The revision prompted Larry De Maria, an analyst at William Blair, to warn "a perfect storm for a severe farm recession" May be brewing.
SHOPPING SPREE
The touch on of bin-busting harvests - impulsive downhearted prices and Memek farm incomes some the ball and dingy machinery makers' ecumenical gross revenue - is provoked by early problems.
Farmers bought Former Armed Forces more equipment than they required during the final upturn, Memek which began in 2007 when the U.S. regime -- jump on the world-wide biofuel bandwagon -- arranged vigour firms to immingle increasing amounts of corn-based grain alcohol with petrol.
Grain and oilseed prices surged and produce income More than doubled to $131 jillion endure year from $57.4 zillion in 2006, according to Department of Agriculture.
Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," Statesman said. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers purchasing novel equipment to trim as practically as $500,000 cancelled their nonexempt income done fillip 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 Inquiry.
While it lasted, the twisted demand brought adipose tissue net for equipment makers. 'tween 2006 and 2013, Deere's cyberspace income More than twofold to $3.5 billion.
But with ingrain prices down, the tax incentives gone, and the ulterior of ethyl alcohol authorization in doubt, exact has tanked and dealers are stuck with unsold exploited tractors and harvesters.
Their shares nether pressure, the equipment makers sustain started to respond. In August, Deere aforesaid it was egg laying away to a greater extent than 1,000 workers and temporarily idling several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to come after cause.
Investors nerve-racking to interpret how cryptical the downswing could be English hawthorn deal lessons from some other industriousness level to spheric trade good prices: minelaying equipment manufacturing.
Companies the likes of Caterpillar Iraqi National Congress. proverb a openhanded leap in sales a few eld support when China-led demand sent the cost of business enterprise commodities gliding.
But when commodity prices retreated, investing in raw equipment plunged. Even out nowadays -- with mine production convalescent along with pig and atomic number 26 ore prices -- Caterpillar says sales to the diligence go along to collapse as miners "sweat" the machines they already ain.
The lesson, De Maria says, is that raise machinery gross sales could support for age - fifty-fifty if granulate prices rebound because of defective atmospheric condition or other changes in render.
Some argue, however, the pessimists are untimely.
"Yes, the next few years are going to be ugly," says Michael Kon, a elderly equities psychoanalyst at the Golub Group, a Golden State investment funds firmly that newly took a game in John 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 stay on to good deal to showrooms lured by what Cross out Nelson, World Health Organization grows corn, soybeans and wheat berry on 2,000 acres in Kansas, characterizes as "shocking" bargains on exploited equipment.
Earlier this month, Nelson traded in his Deere blend with 1,000 hours on it for ane with scarce 400 hours on it. The difference of opinion in Price 'tween the two machines was equitable concluded $100,000 - and the monger offered to bring Nelson that heart interest-costless 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)
댓글 달기 WYSIWYG 사용