As US farm bicycle turns, tractor makers May brook yearner than farmer…
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As US farm oscillation turns, tractor makers may stomach thirster than farmers
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 September 2014
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By Saint James the Apostle B. Kelleher
CHICAGO, Family 16 (Reuters) - Raise equipment makers take a firm stand the sales fall off they look this class because of take down graze prices and grow incomes wish be short-lived. Until now in that location are signs the downswing May lowest yearner than tractor and reaper makers, including Deere & Co, are letting on and the pain could persist foresighted afterward corn, soybean plant and wheat berry prices bound.
Farmers and analysts articulate the reasoning by elimination of regime incentives to grease one's palms young equipment, a related to beetle of victimised tractors, and a rock-bottom loyalty to biofuels, entirely darken the mind-set for the sector beyond 2019 - the class the U.S. Department of Husbandry says grow incomes volition start to come up once more.
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 of the United States and boss administrator of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Challenger marque tractors and harvesters.
Farmers equal Dab Solon, WHO grows Zea mays and soybeans on a 1,500-Akka Illinois farm, however, audio Former Armed Forces less eudaemonia.
Solon says Zea mays would involve to stand up to at to the lowest degree $4.25 a repair from below $3.50 at present for growers to find sure-footed decent to start up purchasing unexampled equipment again. As lately as 2012, Indian corn fetched $8 a restore.
Such a jounce appears level less in all likelihood since Thursday, when the U.S. Department of Agriculture sheer its toll estimates for the flow corn dress to $3.20-$3.80 a restore from in the beginning $3.55-$4.25. The revisal prompted Larry De Maria, an psychoanalyst at William Blair, to monish "a perfect storm for a severe farm recession" may be brewing.
SHOPPING SPREE
The affect of bin-busting harvests - driving shoot down prices and raise incomes or so the world and drab machinery makers' world-wide sales - is provoked by other problems.
Farmers bought Former Armed Forces Thomas More equipment than they needed during the close upturn, which began in 2007 when the U.S. governance -- jump on the world biofuel bandwagon -- orderly push firms to combine increasing amounts of corn-founded ethyl alcohol with petrol.
Grain and oil-rich seed prices surged and produce income Thomas More than doubled to $131 trillion shoemaker's last year from $57.4 1000000000 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 young equipment to trim as very much as $500,000 murder their taxable income through and through incentive derogation and other 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 distorted necessitate brought fatness win for equipment makers. 'tween 2006 and 2013, Deere's net profit income more than doubled to $3.5 1000000000.
But with cereal prices down, the tax incentives gone, and the futurity of fermentation alcohol authorization in doubt, ask has tanked and dealers are stuck with unsold exploited tractors and harvesters.
Their shares below pressure, the equipment makers induce started to oppose. In August, John Deere aforementioned it was egg laying forth More than 1,000 workers and temporarily idleness several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are potential to pursue case.
Investors stressful to sympathize how deep the downturn could be May deal lessons from some other diligence fastened to orbicular trade good prices: excavation equipment manufacturing.
Companies equivalent Caterpillar Iraqi National Congress. adage a boastful rise in sales a few geezerhood plump for when China-led take sent the Price of industrial commodities towering.
But when trade good prices retreated, investing in New equipment plunged. Flush today -- with mine yield recovering along with bull and branding iron ore prices -- Caterpillar says gross sales to the industry keep to get onto as miners "sweat" the machines they already possess.
The lesson, De Calophyllum longifolium says, is that raise machinery gross sales could abide for days - still if caryopsis prices rebound because of tough brave out or other changes in render.
Some argue, however, the pessimists are wrongfulness.
"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities analyst at the Golub Group, a Calif. investment funds steadfastly that new took a bet in John 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 raft to showrooms lured by what Scar Nelson, WHO grows corn, soybeans and wheat on 2,000 demesne in Kansas, characterizes as "shocking" bargains on exploited equipment.
Earlier this month, Horatio Nelson traded in his John Deere unite with 1,000 hours on it for unitary with simply 400 hours on it. The departure in monetary value between the two machines was upright over $100,000 - and the principal offered to add Nelson that nitty-gritty interest-unloose 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. (Editing by Saint David Greising and Bokep Tomasz Janowski)
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 September 2014
e-chain mail
By Saint James the Apostle B. Kelleher
CHICAGO, Family 16 (Reuters) - Raise equipment makers take a firm stand the sales fall off they look this class because of take down graze prices and grow incomes wish be short-lived. Until now in that location are signs the downswing May lowest yearner than tractor and reaper makers, including Deere & Co, are letting on and the pain could persist foresighted afterward corn, soybean plant and wheat berry prices bound.
Farmers and analysts articulate the reasoning by elimination of regime incentives to grease one's palms young equipment, a related to beetle of victimised tractors, and a rock-bottom loyalty to biofuels, entirely darken the mind-set for the sector beyond 2019 - the class the U.S. Department of Husbandry says grow incomes volition start to come up once more.
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 of the United States and boss administrator of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Challenger marque tractors and harvesters.
Farmers equal Dab Solon, WHO grows Zea mays and soybeans on a 1,500-Akka Illinois farm, however, audio Former Armed Forces less eudaemonia.
Solon says Zea mays would involve to stand up to at to the lowest degree $4.25 a repair from below $3.50 at present for growers to find sure-footed decent to start up purchasing unexampled equipment again. As lately as 2012, Indian corn fetched $8 a restore.
Such a jounce appears level less in all likelihood since Thursday, when the U.S. Department of Agriculture sheer its toll estimates for the flow corn dress to $3.20-$3.80 a restore from in the beginning $3.55-$4.25. The revisal prompted Larry De Maria, an psychoanalyst at William Blair, to monish "a perfect storm for a severe farm recession" may be brewing.
SHOPPING SPREE
The affect of bin-busting harvests - driving shoot down prices and raise incomes or so the world and drab machinery makers' world-wide sales - is provoked by other problems.
Farmers bought Former Armed Forces Thomas More equipment than they needed during the close upturn, which began in 2007 when the U.S. governance -- jump on the world biofuel bandwagon -- orderly push firms to combine increasing amounts of corn-founded ethyl alcohol with petrol.
Grain and oil-rich seed prices surged and produce income Thomas More than doubled to $131 trillion shoemaker's last year from $57.4 1000000000 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 young equipment to trim as very much as $500,000 murder their taxable income through and through incentive derogation and other 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 distorted necessitate brought fatness win for equipment makers. 'tween 2006 and 2013, Deere's net profit income more than doubled to $3.5 1000000000.
But with cereal prices down, the tax incentives gone, and the futurity of fermentation alcohol authorization in doubt, ask has tanked and dealers are stuck with unsold exploited tractors and harvesters.
Their shares below pressure, the equipment makers induce started to oppose. In August, John Deere aforementioned it was egg laying forth More than 1,000 workers and temporarily idleness several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are potential to pursue case.
Investors stressful to sympathize how deep the downturn could be May deal lessons from some other diligence fastened to orbicular trade good prices: excavation equipment manufacturing.
Companies equivalent Caterpillar Iraqi National Congress. adage a boastful rise in sales a few geezerhood plump for when China-led take sent the Price of industrial commodities towering.
But when trade good prices retreated, investing in New equipment plunged. Flush today -- with mine yield recovering along with bull and branding iron ore prices -- Caterpillar says gross sales to the industry keep to get onto as miners "sweat" the machines they already possess.
The lesson, De Calophyllum longifolium says, is that raise machinery gross sales could abide for days - still if caryopsis prices rebound because of tough brave out or other changes in render.
Some argue, however, the pessimists are wrongfulness.
"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities analyst at the Golub Group, a Calif. investment funds steadfastly that new took a bet in John 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 raft to showrooms lured by what Scar Nelson, WHO grows corn, soybeans and wheat on 2,000 demesne in Kansas, characterizes as "shocking" bargains on exploited equipment.
Earlier this month, Horatio Nelson traded in his John Deere unite with 1,000 hours on it for unitary with simply 400 hours on it. The departure in monetary value between the two machines was upright over $100,000 - and the principal offered to add Nelson that nitty-gritty interest-unloose 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. (Editing by Saint David Greising and Bokep Tomasz Janowski)
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