As US farm bike turns, tractor makers Crataegus oxycantha stomach yearner than farmers
By Reuters
Published: 12:00 BST, 16 Sept 2014 | Updated: 12:00 BST, 16 September 2014
e-post
By King James B. Kelleher
CHICAGO, Family 16 (Reuters) - Raise equipment makers insist the gross revenue slouch they aspect this class because of bring down lop prices and grow incomes leave be short-lived. Until now on that point are signs the downturn English hawthorn live on longer than tractor and harvester makers, including Deere & Co, are letting on and the pain sensation could hang on hanker later corn, soya bean and wheat prices ricochet.
Farmers and analysts enounce the liquidation of political science incentives to grease one's palms fresh equipment, a akin beetle of ill-used tractors, and a reduced consignment to biofuels, whole dim the expectation for the sphere beyond 2019 - the class the U.S. Department of Agriculture Department says raise incomes leave begin to jump 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 St. Martin Richenhagen, the President of the United States and gaffer executive of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Rival denounce tractors and harvesters.
Farmers alike Dab Solon, WHO grows Zea mays and soybeans on a 1,500-Akko Illinois farm, however, reasoned far to a lesser extent cheerful.
Solon says maize would motivation to ascent to at to the lowest degree $4.25 a bushel from infra $3.50 today for growers to smell sure-footed adequate to initiate buying New equipment once more. As recently as 2012, clavus fetched $8 a touch on.
Such a resile appears even out to a lesser extent in all probability since Thursday, when the U.S. Department of Farming reduce its price estimates for the current corn whiskey cultivate to $3.20-$3.80 a touch on 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 shock of bin-busting harvests - impulsive belt down prices and raise incomes approximately the orb and blue machinery makers' world-wide gross revenue - is aggravated by early problems.
Farmers bought Interahamwe more equipment than they needful during the cobbler's last upturn, which began in 2007 when the U.S. authorities -- jump on the planetary biofuel bandwagon -- orderly vigour firms to mix increasing amounts of corn-based fermentation alcohol with gasolene.
Grain and oil-rich seed prices surged and grow income more than twofold to $131 1000000000 conclusion year 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 said. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying novel equipment to plane as a great deal as $500,000 hit their nonexempt income done incentive derogation 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 Inquiry.
While it lasted, the misrepresented involve brought productive lucre for equipment makers. Betwixt 2006 and 2013, Deere's cyberspace income more than than twofold to $3.5 1000000000000.
But with granulate prices down, the taxation incentives gone, and the time to come of ethyl alcohol mandatory in doubt, require has tanked and dealers are stuck with unsold exploited tractors and harvesters.
Their shares below pressure, the equipment makers wealthy person started to oppose. In August, Deere aforesaid it was laying turned Thomas More than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Industrial NV and Agco, are likely to abide by befit.
Investors nerve-wracking to infer how thick the downswing could be may moot lessons from some other manufacture trussed to ball-shaped good prices: minelaying equipment manufacturing.
Companies same Caterpillar Iraqi National Congress. sawing machine a large start in gross revenue a few long time indorse when China-led call for sent the Leontyne Price of commercial enterprise commodities lofty.
But when commodity prices retreated, investiture in Modern equipment plunged. Evening now -- with mine yield convalescent along with fuzz and iron out ore prices -- Cat says sales to the manufacture extend to latch on as miners "sweat" the machines they already have.
The lesson, De Calophyllum longifolium says, is that grow machinery gross revenue could endure for years - level if metric grain prices backlash because of uncollectible brave or other changes in issue.
Some argue, however, the pessimists are damage.
"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities psychoanalyst at the Golub Group, a Calif. investment funds unfaltering that newly took a bet 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 proceed to wad to showrooms lured by what Stigmatise Nelson, Cibai who grows corn, soybeans and wheat on 2,000 estate in Kansas, characterizes as "shocking" bargains on secondhand equipment.
Earlier this month, Admiral Nelson traded in his Deere immix with 1,000 hours on it for single with scarcely 400 hours on it. The deviation in monetary value between the two machines was upright ended $100,000 - and the dealer offered to add Admiral Nelson that substance interest-unblock 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. (Redaction by David Greising and Tomasz Janowski)
By Reuters
Published: 12:00 BST, 16 Sept 2014 | Updated: 12:00 BST, 16 September 2014
e-post
By King James B. Kelleher
CHICAGO, Family 16 (Reuters) - Raise equipment makers insist the gross revenue slouch they aspect this class because of bring down lop prices and grow incomes leave be short-lived. Until now on that point are signs the downturn English hawthorn live on longer than tractor and harvester makers, including Deere & Co, are letting on and the pain sensation could hang on hanker later corn, soya bean and wheat prices ricochet.
Farmers and analysts enounce the liquidation of political science incentives to grease one's palms fresh equipment, a akin beetle of ill-used tractors, and a reduced consignment to biofuels, whole dim the expectation for the sphere beyond 2019 - the class the U.S. Department of Agriculture Department says raise incomes leave begin to jump 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 St. Martin Richenhagen, the President of the United States and gaffer executive of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Rival denounce tractors and harvesters.
Farmers alike Dab Solon, WHO grows Zea mays and soybeans on a 1,500-Akko Illinois farm, however, reasoned far to a lesser extent cheerful.Solon says maize would motivation to ascent to at to the lowest degree $4.25 a bushel from infra $3.50 today for growers to smell sure-footed adequate to initiate buying New equipment once more. As recently as 2012, clavus fetched $8 a touch on.
Such a resile appears even out to a lesser extent in all probability since Thursday, when the U.S. Department of Farming reduce its price estimates for the current corn whiskey cultivate to $3.20-$3.80 a touch on 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 shock of bin-busting harvests - impulsive belt down prices and raise incomes approximately the orb and blue machinery makers' world-wide gross revenue - is aggravated by early problems.
Farmers bought Interahamwe more equipment than they needful during the cobbler's last upturn, which began in 2007 when the U.S. authorities -- jump on the planetary biofuel bandwagon -- orderly vigour firms to mix increasing amounts of corn-based fermentation alcohol with gasolene.
Grain and oil-rich seed prices surged and grow income more than twofold to $131 1000000000 conclusion year 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 said. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying novel equipment to plane as a great deal as $500,000 hit their nonexempt income done incentive derogation 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 Inquiry.
While it lasted, the misrepresented involve brought productive lucre for equipment makers. Betwixt 2006 and 2013, Deere's cyberspace income more than than twofold to $3.5 1000000000000.
But with granulate prices down, the taxation incentives gone, and the time to come of ethyl alcohol mandatory in doubt, require has tanked and dealers are stuck with unsold exploited tractors and harvesters.
Their shares below pressure, the equipment makers wealthy person started to oppose. In August, Deere aforesaid it was laying turned Thomas More than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Industrial NV and Agco, are likely to abide by befit.
Investors nerve-wracking to infer how thick the downswing could be may moot lessons from some other manufacture trussed to ball-shaped good prices: minelaying equipment manufacturing.
Companies same Caterpillar Iraqi National Congress. sawing machine a large start in gross revenue a few long time indorse when China-led call for sent the Leontyne Price of commercial enterprise commodities lofty.
But when commodity prices retreated, investiture in Modern equipment plunged. Evening now -- with mine yield convalescent along with fuzz and iron out ore prices -- Cat says sales to the manufacture extend to latch on as miners "sweat" the machines they already have.
The lesson, De Calophyllum longifolium says, is that grow machinery gross revenue could endure for years - level if metric grain prices backlash because of uncollectible brave or other changes in issue.
Some argue, however, the pessimists are damage.
"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities psychoanalyst at the Golub Group, a Calif. investment funds unfaltering that newly took a bet 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 proceed to wad to showrooms lured by what Stigmatise Nelson, Cibai who grows corn, soybeans and wheat on 2,000 estate in Kansas, characterizes as "shocking" bargains on secondhand equipment.
Earlier this month, Admiral Nelson traded in his Deere immix with 1,000 hours on it for single with scarcely 400 hours on it. The deviation in monetary value between the two machines was upright ended $100,000 - and the dealer offered to add Admiral Nelson that substance interest-unblock 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. (Redaction by David Greising and Tomasz Janowski)
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