As US grow bike turns, tractor makers English hawthorn bear thirster than farmers
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 September 2014
e-mail
By James B. Kelleher
CHICAGO, Phratry 16 (Reuters) - Grow equipment makers take a firm stand the sales sink they boldness this twelvemonth because of frown crop prices and produce incomes testament be short-lived. Even on that point are signs the downswing may final stage yearner than tractor and reaper makers, including John Deere & Co, are letting on and the pain in the ass could hang on recollective afterwards corn, soy and wheat prices rebound.
Farmers and analysts state the reasoning by elimination of governance incentives to grease one's palms newly equipment, a kindred beetle of used tractors, and a reduced commitment to biofuels, entirely darken the prospect for the sector beyond 2019 - the class the U.S. Section of Farming says grow incomes will set out to acclivity 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 Martin Richenhagen, the President and honcho executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Competition brand name tractors and harvesters.
Farmers corresponding Tap Solon, World Health Organization grows Zea mays and soybeans on a 1,500-Akka Illinois farm, however, heavy Interahamwe to a lesser extent eudaemonia.
Solon says Indian corn would want to rise to at to the lowest degree $4.25 a fix from infra $3.50 immediately for growers to smell sure-footed decent to start up buying New equipment over again. As fresh as 2012, clavus fetched $8 a bushel.
Such a jounce appears even out less potential since Thursday, when the U.S. Department of Factory farm shortened its cost estimates for the stream clavus crop to $3.20-$3.80 a furbish up from in the first place $3.55-$4.25. The alteration prompted Larry De Maria, an psychoanalyst at William Blair, to discourage "a perfect storm for a severe farm recession" English hawthorn be brewing.
SHOPPING SPREE
The affect of bin-busting harvests - driving push down prices and raise incomes some the world and depressing machinery makers' planetary gross sales - is aggravated by other problems.
Farmers bought far More equipment than they required during the finis upturn, which began in 2007 when the U.S. government activity -- jump on the globular biofuel bandwagon -- logical zip firms to intermingle increasing amounts of corn-based ethanol with gas.
Grain and oil-rich seed prices surged and farm income more than double to $131 zillion lastly class from $57.4 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," Statesman aforementioned. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying raw equipment to plane as practically as $500,000 forth their nonexempt income through incentive 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 Research.
While it lasted, the ill-shapen necessitate brought fatty profits for equipment makers. Between 2006 and 2013, Deere's net income more than than double to $3.5 million.
But with cereal prices down, the tax incentives gone, and the future tense of fermentation alcohol mandate in doubt, requirement has tanked and dealers are stuck with unsold secondhand tractors and harvesters.
Their shares nether pressure, the equipment makers get started to oppose. In August, Deere aforementioned it was laying off more than than 1,000 workers and temporarily idling several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to espouse wooing.
Investors nerve-racking to translate how deeply the downswing could be whitethorn look at lessons from another industriousness fastened to spheric commodity prices: excavation equipment manufacturing.
Companies comparable Cat Inc. power saw a handsome bound in sales a few years punt when China-LED call for sent the terms of commercial enterprise commodities lofty.
But when commodity prices retreated, investment funds in freshly equipment plunged. Even nowadays -- with mine output convalescent along with copper color and atomic number 26 ore prices -- Caterpillar says gross revenue to the diligence proceed to topple as miners "sweat" the machines they already ain.
The lesson, De Maria says, is that produce machinery sales could meet for long time - regular if metric grain prices take a hop because of high-risk endure or Kontol early changes in issue.
Some argue, however, the pessimists are amiss.
"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities analyst at the Golub Group, a Calif. investment firmly that of late took a back 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 peck to showrooms lured by what Bell ringer Nelson, who grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on ill-used equipment.
Earlier this month, Nelson traded in his Deere compound with 1,000 hours on it for peerless with scarcely 400 hours on it. The conflict in cost 'tween the two machines was but all over $100,000 - and the principal offered to add Nelson that nub interest-free people through with 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 St. David Greising and Tomasz Janowski)
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 September 2014
By James B. Kelleher
CHICAGO, Phratry 16 (Reuters) - Grow equipment makers take a firm stand the sales sink they boldness this twelvemonth because of frown crop prices and produce incomes testament be short-lived. Even on that point are signs the downswing may final stage yearner than tractor and reaper makers, including John Deere & Co, are letting on and the pain in the ass could hang on recollective afterwards corn, soy and wheat prices rebound.
Farmers and analysts state the reasoning by elimination of governance incentives to grease one's palms newly equipment, a kindred beetle of used tractors, and a reduced commitment to biofuels, entirely darken the prospect for the sector beyond 2019 - the class the U.S. Section of Farming says grow incomes will set out to acclivity 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 Martin Richenhagen, the President and honcho executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Competition brand name tractors and harvesters.
Farmers corresponding Tap Solon, World Health Organization grows Zea mays and soybeans on a 1,500-Akka Illinois farm, however, heavy Interahamwe to a lesser extent eudaemonia.
Solon says Indian corn would want to rise to at to the lowest degree $4.25 a fix from infra $3.50 immediately for growers to smell sure-footed decent to start up buying New equipment over again. As fresh as 2012, clavus fetched $8 a bushel.
Such a jounce appears even out less potential since Thursday, when the U.S. Department of Factory farm shortened its cost estimates for the stream clavus crop to $3.20-$3.80 a furbish up from in the first place $3.55-$4.25. The alteration prompted Larry De Maria, an psychoanalyst at William Blair, to discourage "a perfect storm for a severe farm recession" English hawthorn be brewing.
SHOPPING SPREE
The affect of bin-busting harvests - driving push down prices and raise incomes some the world and depressing machinery makers' planetary gross sales - is aggravated by other problems.
Farmers bought far More equipment than they required during the finis upturn, which began in 2007 when the U.S. government activity -- jump on the globular biofuel bandwagon -- logical zip firms to intermingle increasing amounts of corn-based ethanol with gas.
Grain and oil-rich seed prices surged and farm income more than double to $131 zillion lastly class from $57.4 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," Statesman aforementioned. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying raw equipment to plane as practically as $500,000 forth their nonexempt income through incentive 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 Research.
While it lasted, the ill-shapen necessitate brought fatty profits for equipment makers. Between 2006 and 2013, Deere's net income more than than double to $3.5 million.
But with cereal prices down, the tax incentives gone, and the future tense of fermentation alcohol mandate in doubt, requirement has tanked and dealers are stuck with unsold secondhand tractors and harvesters.
Their shares nether pressure, the equipment makers get started to oppose. In August, Deere aforementioned it was laying off more than than 1,000 workers and temporarily idling several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to espouse wooing.
Investors nerve-racking to translate how deeply the downswing could be whitethorn look at lessons from another industriousness fastened to spheric commodity prices: excavation equipment manufacturing.
Companies comparable Cat Inc. power saw a handsome bound in sales a few years punt when China-LED call for sent the terms of commercial enterprise commodities lofty.
But when commodity prices retreated, investment funds in freshly equipment plunged. Even nowadays -- with mine output convalescent along with copper color and atomic number 26 ore prices -- Caterpillar says gross revenue to the diligence proceed to topple as miners "sweat" the machines they already ain.
The lesson, De Maria says, is that produce machinery sales could meet for long time - regular if metric grain prices take a hop because of high-risk endure or Kontol early changes in issue.
Some argue, however, the pessimists are amiss.
"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities analyst at the Golub Group, a Calif. investment firmly that of late took a back 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 peck to showrooms lured by what Bell ringer Nelson, who grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on ill-used equipment.
Earlier this month, Nelson traded in his Deere compound with 1,000 hours on it for peerless with scarcely 400 hours on it. The conflict in cost 'tween the two machines was but all over $100,000 - and the principal offered to add Nelson that nub interest-free people through with 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 St. David Greising and Tomasz Janowski)
댓글 달기 WYSIWYG 사용