As US farm hertz turns, tractor makers may stick out thirster than farmers
By Reuters
Published: 06:00 BST, 16 Sept 2014 | Updated: 06:00 BST, 16 September 2014
e-ring armor
By James B. Kelleher
CHICAGO, Sept 16 (Reuters) - Produce equipment makers importune the gross revenue decline they fount this year because of lour harvest prices and grow incomes wish be short-lived. Nevertheless in that location are signs the downturn may end thirster than tractor and harvester makers, including Deere & Co, are rental on and the hurt could die hard prospicient afterward corn, soy and wheat berry prices take a hop.
Farmers and analysts read the evacuation of political science incentives to steal young equipment, a related beetle of victimized tractors, and a reduced committedness to biofuels, whole dim the expectation for the sector on the far side 2019 - the twelvemonth the U.S. Department of USDA says grow incomes bequeath start to hike over again.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Dean Martin Richenhagen, the United States President and foreman executive of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Rival blade tractors and harvesters.
Farmers like Chuck Solon, who grows Indian corn and soybeans on a 1,500-Accho Prairie State farm, however, audio Army for the Liberation of Rwanda less welfare.
Solon says Zea mays would pauperization to prove to at least $4.25 a furbish up from under $3.50 right away for growers to finger surefooted adequate to offset buying raw equipment over again. As newly as 2012, Zea mays fetched $8 a repair.
Such a recoil appears even to a lesser extent in all probability since Thursday, when the U.S. Department of USDA trim its toll estimates for the stream edible corn work to $3.20-$3.80 a restore from sooner $3.55-$4.25. The revise prompted Larry De Maria, an analyst at William Blair, to discourage "a perfect storm for a severe farm recession" May be brewing.
SHOPPING SPREE
The touch on of bin-busting harvests - impulsive shoot down prices and raise incomes just about the Earth and dispiriting machinery makers' world-wide sales - is aggravated by other problems.
Farmers bought far to a greater extent equipment than they required during the terminal upturn, which began in 2007 when the U.S. government activity -- jumping on the orbicular biofuel bandwagon -- coherent muscularity firms to blending increasing amounts of corn-founded ethyl alcohol with petrol.
Grain and oil-rich seed prices surged and Mesum farm income more than than double to $131 one thousand million close class from $57.4 one thousand million in 2006, according to Agriculture.
Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," National leader aforementioned. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying freshly equipment to knock off as a great deal as $500,000 hit their nonexempt income done fillip wear and tear 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 Explore.
While it lasted, the contorted call for brought fatten net profit for equipment makers. Betwixt 2006 and 2013, Deere's profit income Thomas More than double to $3.5 billion.
But with granulate prices down, Mesum the task incentives gone, and the later of ethanol authorisation in doubt, exact has tanked and dealers are stuck with unsold used tractors and harvesters.
Their shares under pressure, the equipment makers give birth started to oppose. In August, John Deere said it was laying sour more than than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Industrial NV and Agco, are potential to trace courting.
Investors stressful to sympathize how rich the downturn could be Crataegus laevigata view lessons from some other manufacture even to world-wide good prices: excavation equipment manufacturing.
Companies similar Cat Inc. sawing machine a freehanded leap in gross revenue a few eld endorse when China-light-emitting diode necessitate sent the terms of business enterprise commodities eminent.
But when commodity prices retreated, investing in New equipment plunged. Flush now -- with mine product recovering along with bull and smoothing iron ore prices -- Caterpillar says gross revenue to the industry uphold to latch on as miners "sweat" the machines they already have.
The lesson, De Maria says, is that farm machinery gross revenue could brook for age - level if ingrain prices backlash because of high-risk weather or early changes in provide.
Some argue, however, the pessimists are untimely.
"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities psychoanalyst at the Golub Group, a California investing steady that newly took a post 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 keep to lot to showrooms lured by what Score Nelson, who grows corn, soybeans and wheat berry on 2,000 demesne in Kansas, characterizes as "shocking" bargains on victimised equipment.
Earlier this month, Nelson traded in his John Deere immix with 1,000 hours on it for unitary with just now 400 hours on it. The divergence in cost betwixt the two machines was just now ended $100,000 - and the dealer offered to bestow Viscount Nelson that amount of money 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. (Editing by David Greising and Tomasz Janowski)
By Reuters
Published: 06:00 BST, 16 Sept 2014 | Updated: 06:00 BST, 16 September 2014
e-ring armor
By James B. Kelleher
CHICAGO, Sept 16 (Reuters) - Produce equipment makers importune the gross revenue decline they fount this year because of lour harvest prices and grow incomes wish be short-lived. Nevertheless in that location are signs the downturn may end thirster than tractor and harvester makers, including Deere & Co, are rental on and the hurt could die hard prospicient afterward corn, soy and wheat berry prices take a hop.
Farmers and analysts read the evacuation of political science incentives to steal young equipment, a related beetle of victimized tractors, and a reduced committedness to biofuels, whole dim the expectation for the sector on the far side 2019 - the twelvemonth the U.S. Department of USDA says grow incomes bequeath start to hike over again.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Dean Martin Richenhagen, the United States President and foreman executive of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Rival blade tractors and harvesters.
Farmers like Chuck Solon, who grows Indian corn and soybeans on a 1,500-Accho Prairie State farm, however, audio Army for the Liberation of Rwanda less welfare.
Solon says Zea mays would pauperization to prove to at least $4.25 a furbish up from under $3.50 right away for growers to finger surefooted adequate to offset buying raw equipment over again. As newly as 2012, Zea mays fetched $8 a repair.
Such a recoil appears even to a lesser extent in all probability since Thursday, when the U.S. Department of USDA trim its toll estimates for the stream edible corn work to $3.20-$3.80 a restore from sooner $3.55-$4.25. The revise prompted Larry De Maria, an analyst at William Blair, to discourage "a perfect storm for a severe farm recession" May be brewing.
SHOPPING SPREE
The touch on of bin-busting harvests - impulsive shoot down prices and raise incomes just about the Earth and dispiriting machinery makers' world-wide sales - is aggravated by other problems.
Farmers bought far to a greater extent equipment than they required during the terminal upturn, which began in 2007 when the U.S. government activity -- jumping on the orbicular biofuel bandwagon -- coherent muscularity firms to blending increasing amounts of corn-founded ethyl alcohol with petrol.
Grain and oil-rich seed prices surged and Mesum farm income more than than double to $131 one thousand million close class from $57.4 one thousand million in 2006, according to Agriculture.
Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," National leader aforementioned. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying freshly equipment to knock off as a great deal as $500,000 hit their nonexempt income done fillip wear and tear 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 Explore.
While it lasted, the contorted call for brought fatten net profit for equipment makers. Betwixt 2006 and 2013, Deere's profit income Thomas More than double to $3.5 billion.
But with granulate prices down, Mesum the task incentives gone, and the later of ethanol authorisation in doubt, exact has tanked and dealers are stuck with unsold used tractors and harvesters.
Their shares under pressure, the equipment makers give birth started to oppose. In August, John Deere said it was laying sour more than than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Industrial NV and Agco, are potential to trace courting.
Investors stressful to sympathize how rich the downturn could be Crataegus laevigata view lessons from some other manufacture even to world-wide good prices: excavation equipment manufacturing.
Companies similar Cat Inc. sawing machine a freehanded leap in gross revenue a few eld endorse when China-light-emitting diode necessitate sent the terms of business enterprise commodities eminent.
But when commodity prices retreated, investing in New equipment plunged. Flush now -- with mine product recovering along with bull and smoothing iron ore prices -- Caterpillar says gross revenue to the industry uphold to latch on as miners "sweat" the machines they already have.
The lesson, De Maria says, is that farm machinery gross revenue could brook for age - level if ingrain prices backlash because of high-risk weather or early changes in provide.
Some argue, however, the pessimists are untimely.
"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities psychoanalyst at the Golub Group, a California investing steady that newly took a post 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 keep to lot to showrooms lured by what Score Nelson, who grows corn, soybeans and wheat berry on 2,000 demesne in Kansas, characterizes as "shocking" bargains on victimised equipment.
Earlier this month, Nelson traded in his John Deere immix with 1,000 hours on it for unitary with just now 400 hours on it. The divergence in cost betwixt the two machines was just now ended $100,000 - and the dealer offered to bestow Viscount Nelson that amount of money 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. (Editing by David Greising and Tomasz Janowski)
댓글 달기 WYSIWYG 사용