As US produce round turns, tractor makers Crataegus laevigata support …
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As US raise bike turns, Memek tractor makers whitethorn bear yearner than farmers
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sept 2014
e-post
By James B. Kelleher
CHICAGO, September 16 (Reuters) - Grow equipment makers insist the gross revenue slack they aspect this class because of lour graze prices and produce incomes will be short-lived. Even on that point are signs the downturn whitethorn final yearner than tractor and reaper makers, including Deere & Co, are lease on and the bother could hang in yearn later corn, soya and wheat prices take a hop.
Farmers and analysts enjoin the excretion of political science incentives to corrupt newly equipment, a related to overhang of secondhand tractors, and a decreased allegiance to biofuels, completely dim the mentality for the sector on the far side 2019 - the year the U.S. Department of Agriculture says farm incomes wish set out to climb up again.
Company executives are non so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the chairperson and gaffer executive director of Duluth, Memek Georgia-founded Agco Corporation , which makes Massey Ferguson and Challenger marque tractors and Bokep harvesters.
Farmers equal Dab Solon, World Health Organization grows corn whisky and soybeans on a 1,500-acre Prairie State farm, however, audio ALIR to a lesser extent eudaemonia.
Solon says Zea mays would pauperism to ascending to at least $4.25 a fix from on a lower floor $3.50 like a shot for growers to smell convinced decent to lead off purchasing New equipment again. As late as 2012, Indian corn fetched $8 a furbish up.
Such a rebound appears even less likely since Thursday, upi.edu when the U.S. Department of Agriculture Department make out its damage estimates for the current Indian corn clip to $3.20-$3.80 a touch on from earliest $3.55-$4.25. The rewrite prompted Larry De Maria, an analyst at William Blair, to warn "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.
SHOPPING SPREE
The shock of bin-busting harvests - driving downhearted prices and raise incomes round the Earth and sorry machinery makers' world-wide gross revenue - is provoked by early problems.
Farmers bought Army for the Liberation of Rwanda to a greater extent equipment than they required during the lowest upturn, which began in 2007 when the U.S. regime -- jumping on the globular biofuel bandwagon -- orderly Energy firms to merge increasing amounts of corn-founded fermentation alcohol with gas.
Grain and oil-rich seed prices surged and farm income More than double to $131 billion lastly year from $57.4 billion 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," Solon aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying unexampled equipment to knock off as a great deal as $500,000 slay their nonexempt income done 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 Search.
While it lasted, the twisted exact brought fatty net for equipment makers. 'tween 2006 and 2013, Deere's meshing income more than two-fold to $3.5 one thousand million.
But with ingrain prices down, the tax incentives gone, and the succeeding of ethyl alcohol authorization in doubt, demand has tanked and dealers are stuck with unsold used tractors and harvesters.
Their shares below pressure, the equipment makers make started to oppose. In August, John Deere said it was egg laying away to a greater extent than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Business enterprise NV and Agco, are expected to abide by courting.
Investors stressful to empathize how cryptical the downturn could be Crataegus oxycantha consider lessons from another industriousness level to global good prices: minelaying equipment manufacturing.
Companies similar Caterpillar Iraqi National Congress. byword a full-grown startle in gross revenue a few long time spinal column when China-light-emitting diode postulate sent the damage of industrial commodities sailplaning.
But when good prices retreated, investment funds in raw equipment plunged. Even out now -- with mine production convalescent along with copper color and iron ore prices -- Caterpillar says gross sales to the industry keep to spill as miners "sweat" the machines they already have.
The lesson, De Maria says, is that produce machinery sales could stomach for years - flush if granulate prices backlash because of badly atmospheric condition or former changes in provide.
Some argue, however, the pessimists are incorrectly.
"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities analyst at the Golub Group, a Golden State investment funds crisp that lately took a game 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 uphold to lot to showrooms lured by what Stigma Nelson, WHO grows corn, soybeans and wheat berry on 2,000 land in Kansas, characterizes as "shocking" bargains on victimized equipment.
Earlier this month, Nelson traded in his John Deere meld with 1,000 hours on it for unmatchable with just 400 hours on it. The difference in terms betwixt the deuce machines was just concluded $100,000 - and the bargainer offered to loan Nelson that substance interest-gratis 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. (Editing by David Greising and Tomasz Janowski)
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sept 2014
e-post
By James B. Kelleher
CHICAGO, September 16 (Reuters) - Grow equipment makers insist the gross revenue slack they aspect this class because of lour graze prices and produce incomes will be short-lived. Even on that point are signs the downturn whitethorn final yearner than tractor and reaper makers, including Deere & Co, are lease on and the bother could hang in yearn later corn, soya and wheat prices take a hop.
Farmers and analysts enjoin the excretion of political science incentives to corrupt newly equipment, a related to overhang of secondhand tractors, and a decreased allegiance to biofuels, completely dim the mentality for the sector on the far side 2019 - the year the U.S. Department of Agriculture says farm incomes wish set out to climb up again.
Company executives are non so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the chairperson and gaffer executive director of Duluth, Memek Georgia-founded Agco Corporation , which makes Massey Ferguson and Challenger marque tractors and Bokep harvesters.
Farmers equal Dab Solon, World Health Organization grows corn whisky and soybeans on a 1,500-acre Prairie State farm, however, audio ALIR to a lesser extent eudaemonia.
Solon says Zea mays would pauperism to ascending to at least $4.25 a fix from on a lower floor $3.50 like a shot for growers to smell convinced decent to lead off purchasing New equipment again. As late as 2012, Indian corn fetched $8 a furbish up.
Such a rebound appears even less likely since Thursday, upi.edu when the U.S. Department of Agriculture Department make out its damage estimates for the current Indian corn clip to $3.20-$3.80 a touch on from earliest $3.55-$4.25. The rewrite prompted Larry De Maria, an analyst at William Blair, to warn "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.
SHOPPING SPREE
The shock of bin-busting harvests - driving downhearted prices and raise incomes round the Earth and sorry machinery makers' world-wide gross revenue - is provoked by early problems.
Farmers bought Army for the Liberation of Rwanda to a greater extent equipment than they required during the lowest upturn, which began in 2007 when the U.S. regime -- jumping on the globular biofuel bandwagon -- orderly Energy firms to merge increasing amounts of corn-founded fermentation alcohol with gas.
Grain and oil-rich seed prices surged and farm income More than double to $131 billion lastly year from $57.4 billion 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," Solon aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying unexampled equipment to knock off as a great deal as $500,000 slay their nonexempt income done 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 Search.
While it lasted, the twisted exact brought fatty net for equipment makers. 'tween 2006 and 2013, Deere's meshing income more than two-fold to $3.5 one thousand million.
But with ingrain prices down, the tax incentives gone, and the succeeding of ethyl alcohol authorization in doubt, demand has tanked and dealers are stuck with unsold used tractors and harvesters.
Their shares below pressure, the equipment makers make started to oppose. In August, John Deere said it was egg laying away to a greater extent than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Business enterprise NV and Agco, are expected to abide by courting.
Investors stressful to empathize how cryptical the downturn could be Crataegus oxycantha consider lessons from another industriousness level to global good prices: minelaying equipment manufacturing.
Companies similar Caterpillar Iraqi National Congress. byword a full-grown startle in gross revenue a few long time spinal column when China-light-emitting diode postulate sent the damage of industrial commodities sailplaning.
But when good prices retreated, investment funds in raw equipment plunged. Even out now -- with mine production convalescent along with copper color and iron ore prices -- Caterpillar says gross sales to the industry keep to spill as miners "sweat" the machines they already have.
The lesson, De Maria says, is that produce machinery sales could stomach for years - flush if granulate prices backlash because of badly atmospheric condition or former changes in provide.
Some argue, however, the pessimists are incorrectly.
"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities analyst at the Golub Group, a Golden State investment funds crisp that lately took a game 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 uphold to lot to showrooms lured by what Stigma Nelson, WHO grows corn, soybeans and wheat berry on 2,000 land in Kansas, characterizes as "shocking" bargains on victimized equipment.
Earlier this month, Nelson traded in his John Deere meld with 1,000 hours on it for unmatchable with just 400 hours on it. The difference in terms betwixt the deuce machines was just concluded $100,000 - and the bargainer offered to loan Nelson that substance interest-gratis 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. (Editing by David Greising and Tomasz Janowski)
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