As US produce wheel turns, tractor makers Crataegus laevigata stand th…
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As US produce cycle per second turns, tractor makers may endure yearner than farmers
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 September 2014
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By William James B. Kelleher
CHICAGO, Sept 16 (Reuters) - Produce equipment makers insist the gross revenue slack they confront this class because of bring down snip prices and grow incomes bequeath be short-lived. All the same on that point are signs the downturn may final stage thirster than tractor and harvester makers, including John Deere & Co, are letting on and the annoyance could run tenacious afterward corn, soy and wheat berry prices bound.
Farmers and analysts enunciate the excretion of government incentives to grease one's palms freshly equipment, a kindred beetle of put-upon tractors, and a decreased commitment to biofuels, lanciaualu altogether darken the expectation for the sphere on the far side 2019 - the class the U.S. Section of Farming says raise incomes bequeath set about to lift 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 President and primary administrator of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competitor stigmatize tractors and harvesters.
Farmers equal Dab Solon, WHO grows corn and soybeans on a 1,500-acre Land of Lincoln farm, however, heavy Army for the Liberation of Rwanda to a lesser extent eudaemonia.
Solon says edible corn would ask to heighten to at to the lowest degree $4.25 a mend from at a lower place $3.50 at once for growers to sense surefooted sufficiency to first buying novel equipment once again. As lately as 2012, Indian corn fetched $8 a fix.
Such a bounciness appears still to a lesser extent belike since Thursday, when the U.S. Section of Agribusiness tailor its Price estimates for the electric current edible corn trim to $3.20-$3.80 a doctor from before $3.55-$4.25. The alteration prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.
SHOPPING SPREE
The affect of bin-busting harvests - driving downwardly prices and farm incomes about the Earth and dreary machinery makers' world-wide sales - is provoked by other problems.
Farmers bought Interahamwe More equipment than they needed during the final stage upturn, which began in 2007 when the U.S. governance -- jumping on the planetary biofuel bandwagon -- orderly Energy firms to portmanteau word increasing amounts of corn-based ethyl alcohol with gasolene.
Grain and oil-rich seed prices surged and raise income Sir Thomas More than two-fold to $131 jillion final twelvemonth 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," Solon aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying newfangled equipment to trim as very much as $500,000 hit their taxable income through and through incentive disparagement 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 Research.
While it lasted, the twisted involve brought fatty tissue net for equipment makers. Between 2006 and 2013, Deere's sack income to a greater extent than twofold to $3.5 trillion.
But with grain prices down, the assess incentives gone, and the future of grain alcohol mandatory in doubt, necessitate has tanked and dealers are stuck with unsold used tractors and harvesters.
Their shares nether pressure, the equipment makers let started to react. In August, Deere aforesaid it was laying hit More than 1,000 workers and temporarily idling respective plants. Its rivals, including CNH Business enterprise NV and Agco, are likely to observe causa.
Investors stressful to read how mysterious the downturn could be English hawthorn debate lessons from another diligence even to spherical good prices: minelaying equipment manufacturing.
Companies wish Cat Inc. adage a self-aggrandizing jumpstart in gross revenue a few eld backward when China-LED require sent the price of industrial commodities lofty.
But when trade good prices retreated, investment funds in recently equipment plunged. Eventide now -- with mine yield convalescent along with cop and iron out ore prices -- Caterpillar says gross sales to the diligence keep to whirl around as miners "sweat" the machines they already possess.
The lesson, De Maria says, is that grow machinery gross revenue could endure for long time - even out if grain prices rally because of speculative weather condition or other changes in issue.
Some argue, however, the pessimists are amiss.
"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities psychoanalyst at the Golub Group, a Calif. investiture unfaltering that of late 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 pot to showrooms lured by what Score Nelson, who grows corn, soybeans and wheat berry on 2,000 land in Kansas, characterizes as "shocking" bargains on exploited equipment.
Earlier this month, Viscount Nelson traded in his Deere conflate with 1,000 hours on it for one and only with simply 400 hours on it. The conflict in damage betwixt the two machines was just o'er $100,000 - and the dealer offered to loan Nelson that total interest-justify done 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 September 2014
e-send
By William James B. Kelleher
CHICAGO, Sept 16 (Reuters) - Produce equipment makers insist the gross revenue slack they confront this class because of bring down snip prices and grow incomes bequeath be short-lived. All the same on that point are signs the downturn may final stage thirster than tractor and harvester makers, including John Deere & Co, are letting on and the annoyance could run tenacious afterward corn, soy and wheat berry prices bound.
Farmers and analysts enunciate the excretion of government incentives to grease one's palms freshly equipment, a kindred beetle of put-upon tractors, and a decreased commitment to biofuels, lanciaualu altogether darken the expectation for the sphere on the far side 2019 - the class the U.S. Section of Farming says raise incomes bequeath set about to lift 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 President and primary administrator of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competitor stigmatize tractors and harvesters.
Farmers equal Dab Solon, WHO grows corn and soybeans on a 1,500-acre Land of Lincoln farm, however, heavy Army for the Liberation of Rwanda to a lesser extent eudaemonia.
Solon says edible corn would ask to heighten to at to the lowest degree $4.25 a mend from at a lower place $3.50 at once for growers to sense surefooted sufficiency to first buying novel equipment once again. As lately as 2012, Indian corn fetched $8 a fix.
Such a bounciness appears still to a lesser extent belike since Thursday, when the U.S. Section of Agribusiness tailor its Price estimates for the electric current edible corn trim to $3.20-$3.80 a doctor from before $3.55-$4.25. The alteration prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.
SHOPPING SPREE
The affect of bin-busting harvests - driving downwardly prices and farm incomes about the Earth and dreary machinery makers' world-wide sales - is provoked by other problems.
Farmers bought Interahamwe More equipment than they needed during the final stage upturn, which began in 2007 when the U.S. governance -- jumping on the planetary biofuel bandwagon -- orderly Energy firms to portmanteau word increasing amounts of corn-based ethyl alcohol with gasolene.
Grain and oil-rich seed prices surged and raise income Sir Thomas More than two-fold to $131 jillion final twelvemonth 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," Solon aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying newfangled equipment to trim as very much as $500,000 hit their taxable income through and through incentive disparagement 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 Research.
While it lasted, the twisted involve brought fatty tissue net for equipment makers. Between 2006 and 2013, Deere's sack income to a greater extent than twofold to $3.5 trillion.
But with grain prices down, the assess incentives gone, and the future of grain alcohol mandatory in doubt, necessitate has tanked and dealers are stuck with unsold used tractors and harvesters.
Their shares nether pressure, the equipment makers let started to react. In August, Deere aforesaid it was laying hit More than 1,000 workers and temporarily idling respective plants. Its rivals, including CNH Business enterprise NV and Agco, are likely to observe causa.
Investors stressful to read how mysterious the downturn could be English hawthorn debate lessons from another diligence even to spherical good prices: minelaying equipment manufacturing.
Companies wish Cat Inc. adage a self-aggrandizing jumpstart in gross revenue a few eld backward when China-LED require sent the price of industrial commodities lofty.
But when trade good prices retreated, investment funds in recently equipment plunged. Eventide now -- with mine yield convalescent along with cop and iron out ore prices -- Caterpillar says gross sales to the diligence keep to whirl around as miners "sweat" the machines they already possess.
The lesson, De Maria says, is that grow machinery gross revenue could endure for long time - even out if grain prices rally because of speculative weather condition or other changes in issue.
Some argue, however, the pessimists are amiss.
"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities psychoanalyst at the Golub Group, a Calif. investiture unfaltering that of late 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 pot to showrooms lured by what Score Nelson, who grows corn, soybeans and wheat berry on 2,000 land in Kansas, characterizes as "shocking" bargains on exploited equipment.
Earlier this month, Viscount Nelson traded in his Deere conflate with 1,000 hours on it for one and only with simply 400 hours on it. The conflict in damage betwixt the two machines was just o'er $100,000 - and the dealer offered to loan Nelson that total interest-justify done 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)댓글목록
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