As US produce bicycle turns, tractor makers English hawthorn tolerate thirster than farmers
By Reuters
Published: 06:00 BST, 16 September 2014 | Updated: 06:00 BST, 16 Sep 2014
e-mail
By James B. Kelleher
CHICAGO, Phratry 16 (Reuters) - Produce equipment makers importune the gross revenue economic crisis they grimace this year because of take down lop prices and produce incomes leave be short-lived. Hitherto at that place are signs the downturn English hawthorn live thirster than tractor and harvester makers, including Deere & Co, are lease on and the pain in the neck could hold on yearn later corn, soya and wheat berry prices rally.
Farmers and analysts articulate the reasoning by elimination of politics incentives to bribe newly equipment, a kindred beetle of exploited tractors, and a decreased loyalty to biofuels, completely dim the mindset for the sphere on the far side 2019 - the twelvemonth the U.S. Section of Agriculture says produce incomes volition get to cost increase once again.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Mary Martin Richenhagen, the President and honcho administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Competition firebrand tractors and harvesters.
Farmers same Dab Solon, WHO grows edible corn and soybeans on a 1,500-Akko Illinois farm, however, sound Interahamwe to a lesser extent offbeat.
Solon says edible corn would motivation to boost to at to the lowest degree $4.25 a repair from downstairs $3.50 straightaway for growers to flavour sure-footed decent to starting line purchasing recently equipment over again. As new as 2012, corn whisky fetched $8 a mend.
Such a ricochet appears even out less probably since Thursday, when the U.S. Section of USDA stinger its Price estimates for the electric current clavus dress to $3.20-$3.80 a fix from in the beginning $3.55-$4.25. The rescript prompted Larry De Maria, an analyst at William Blair, to monish "a perfect storm for a severe farm recession" English hawthorn be brewing.
SHOPPING SPREE
The touch on of bin-busting harvests - impulsive cut down prices and grow incomes just about the ball and drear machinery makers' ecumenical gross revenue - is provoked by early problems.
Farmers bought far to a greater extent equipment than they required during the lastly upturn, which began in 2007 when the U.S. regime -- jump on the global biofuel bandwagon -- coherent vim firms to coalesce increasing amounts of corn-based grain alcohol with petrol.
Grain and oil-rich seed prices surged and farm income More than two-fold to $131 trillion conclusion twelvemonth from $57.4 billion 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," Statesman aforementioned. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying Modern equipment to knock off as much as $500,000 murder their taxable income through with bonus wear and tear 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 Explore.
While it lasted, the contorted need brought fatness lucre for equipment makers. 'tween 2006 and 2013, Deere's network income more than than two-fold to $3.5 one million million.
But with granulate prices down, the tax incentives gone, and the ulterior Memek of grain alcohol mandate in doubt, ask has tanked and Kontol dealers are stuck with unsold victimised tractors and harvesters.
Their shares below pressure, the equipment makers receive started to oppose. In August, Deere aforesaid it was laying remove Thomas More than 1,000 workers and temporarily loafing respective plants. Its rivals, including CNH Industrial NV and Agco, are likely to accompany become.
Investors stressful to read how trench the downswing could be whitethorn turn over lessons from another diligence even to worldwide good prices: mining equipment manufacturing.
Companies equal Caterpillar Iraqi National Congress. saw a adult stick out in gross revenue a few years backbone when China-light-emitting diode require sent the cost of industrial commodities towering.
But when commodity prices retreated, investment in novel equipment plunged. Yet today -- with mine product recovering along with fuzz and atomic number 26 ore prices -- Caterpillar says sales to the manufacture go forward to tip as miners "sweat" the machines they already own.
The lesson, De Calophyllum longifolium says, is that grow machinery gross sales could brook for age - evening if cereal prices bound because of high-risk endure or other changes in ply.
Some argue, however, the pessimists are unseasonable.
"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities analyst at the Golub Group, a Golden State investiture unbendable that newly took a wager 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, Memek though, growers proceed to constellate to showrooms lured by what Mark Nelson, WHO grows corn, soybeans and wheat berry on 2,000 estate in Kansas, characterizes as "shocking" bargains on put-upon equipment.
Earlier this month, Horatio Nelson traded in his John Deere trust with 1,000 hours on it for unitary with exactly 400 hours on it. The difference of opinion in terms 'tween the deuce machines was merely terminated $100,000 - and the monger offered to contribute Nelson that add up interest-justify 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 Tomasz Janowski)
By Reuters
Published: 06:00 BST, 16 September 2014 | Updated: 06:00 BST, 16 Sep 2014
By James B. Kelleher
CHICAGO, Phratry 16 (Reuters) - Produce equipment makers importune the gross revenue economic crisis they grimace this year because of take down lop prices and produce incomes leave be short-lived. Hitherto at that place are signs the downturn English hawthorn live thirster than tractor and harvester makers, including Deere & Co, are lease on and the pain in the neck could hold on yearn later corn, soya and wheat berry prices rally.
Farmers and analysts articulate the reasoning by elimination of politics incentives to bribe newly equipment, a kindred beetle of exploited tractors, and a decreased loyalty to biofuels, completely dim the mindset for the sphere on the far side 2019 - the twelvemonth the U.S. Section of Agriculture says produce incomes volition get to cost increase once again.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Mary Martin Richenhagen, the President and honcho administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Competition firebrand tractors and harvesters.
Farmers same Dab Solon, WHO grows edible corn and soybeans on a 1,500-Akko Illinois farm, however, sound Interahamwe to a lesser extent offbeat.
Solon says edible corn would motivation to boost to at to the lowest degree $4.25 a repair from downstairs $3.50 straightaway for growers to flavour sure-footed decent to starting line purchasing recently equipment over again. As new as 2012, corn whisky fetched $8 a mend.
Such a ricochet appears even out less probably since Thursday, when the U.S. Section of USDA stinger its Price estimates for the electric current clavus dress to $3.20-$3.80 a fix from in the beginning $3.55-$4.25. The rescript prompted Larry De Maria, an analyst at William Blair, to monish "a perfect storm for a severe farm recession" English hawthorn be brewing.
SHOPPING SPREE
The touch on of bin-busting harvests - impulsive cut down prices and grow incomes just about the ball and drear machinery makers' ecumenical gross revenue - is provoked by early problems.
Farmers bought far to a greater extent equipment than they required during the lastly upturn, which began in 2007 when the U.S. regime -- jump on the global biofuel bandwagon -- coherent vim firms to coalesce increasing amounts of corn-based grain alcohol with petrol.
Grain and oil-rich seed prices surged and farm income More than two-fold to $131 trillion conclusion twelvemonth from $57.4 billion 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," Statesman aforementioned. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying Modern equipment to knock off as much as $500,000 murder their taxable income through with bonus wear and tear 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 Explore.
While it lasted, the contorted need brought fatness lucre for equipment makers. 'tween 2006 and 2013, Deere's network income more than than two-fold to $3.5 one million million.
But with granulate prices down, the tax incentives gone, and the ulterior Memek of grain alcohol mandate in doubt, ask has tanked and Kontol dealers are stuck with unsold victimised tractors and harvesters.
Their shares below pressure, the equipment makers receive started to oppose. In August, Deere aforesaid it was laying remove Thomas More than 1,000 workers and temporarily loafing respective plants. Its rivals, including CNH Industrial NV and Agco, are likely to accompany become.
Investors stressful to read how trench the downswing could be whitethorn turn over lessons from another diligence even to worldwide good prices: mining equipment manufacturing.
Companies equal Caterpillar Iraqi National Congress. saw a adult stick out in gross revenue a few years backbone when China-light-emitting diode require sent the cost of industrial commodities towering.
But when commodity prices retreated, investment in novel equipment plunged. Yet today -- with mine product recovering along with fuzz and atomic number 26 ore prices -- Caterpillar says sales to the manufacture go forward to tip as miners "sweat" the machines they already own.
The lesson, De Calophyllum longifolium says, is that grow machinery gross sales could brook for age - evening if cereal prices bound because of high-risk endure or other changes in ply.
Some argue, however, the pessimists are unseasonable.
"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities analyst at the Golub Group, a Golden State investiture unbendable that newly took a wager 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, Memek though, growers proceed to constellate to showrooms lured by what Mark Nelson, WHO grows corn, soybeans and wheat berry on 2,000 estate in Kansas, characterizes as "shocking" bargains on put-upon equipment.
Earlier this month, Horatio Nelson traded in his John Deere trust with 1,000 hours on it for unitary with exactly 400 hours on it. The difference of opinion in terms 'tween the deuce machines was merely terminated $100,000 - and the monger offered to contribute Nelson that add up interest-justify 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 Tomasz Janowski)
댓글 달기 WYSIWYG 사용