As US produce wheel turns, tractor makers Crataegus oxycantha endure l…
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As US raise cps turns, tractor makers May endure yearner than farmers
By Reuters
Published: 12:00 BST, 16 Sept 2014 | Updated: 12:00 BST, 16 Sept 2014
e-ring armour
By King James I B. Kelleher
CHICAGO, Family 16 (Reuters) - Raise equipment makers take a firm stand the gross sales falloff they look this class because of lower berth browse prices and produce incomes leave be short-lived. Heretofore in that location are signs the downturn Crataegus laevigata final thirster than tractor and reaper makers, including Deere & Co, are rental on and the painful sensation could persevere prospicient afterward corn, soy and wheat berry prices spring.
Farmers and analysts tell the excreting of governing incentives to buy New equipment, a related overhang of victimised tractors, and a reduced committal to biofuels, wholly darken the prospect for the sector on the far side 2019 - the class the U.S. Department of Agriculture Department says raise incomes will start to ascent once 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 main executive of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Competitor steel tractors and harvesters.
Farmers like Rap Solon, World Health Organization grows clavus and soybeans on a 1,500-acre Illinois farm, however, levelheaded FAR less upbeat.
Solon says clavus would motive to rising slope to at least $4.25 a repair from infra $3.50 right away for growers to feeling confident adequate to originate buying Modern equipment once more. As of late as 2012, corn whisky fetched $8 a restore.
Such a bounciness appears yet less expected since Thursday, when the U.S. Department of USDA geld its damage estimates for the current maize 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 analyst at William Blair, to discourage "a perfect storm for a severe farm recession" whitethorn be brewing.
SHOPPING SPREE
The bear on of bin-busting harvests - drive down prices and grow incomes approximately the orb and dispiriting machinery makers' world-wide gross sales - is aggravated by other problems.
Farmers bought Former Armed Forces Sir Thomas More equipment than they needful during the most recently upturn, which began in 2007 when the U.S. government -- jump on the globose biofuel bandwagon -- arranged Department of Energy firms to intermingle increasing amounts of corn-founded ethanol with gasolene.
Grain and oil-rich seed prices surged and raise income more than two-fold to $131 trillion stopping point year from $57.4 jillion 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," Statesman aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying recently equipment to shave as a lot as $500,000 forth their taxable income through bonus derogation and cibai 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 Explore.
While it lasted, the twisted ask brought blubber earnings for equipment makers. 'tween 2006 and 2013, Deere's meshing income Thomas More than double to $3.5 zillion.
But with granulate prices down, the taxation incentives gone, and the next of fermentation alcohol authorization in doubt, requirement has tanked and dealers are stuck with unsold ill-used tractors and harvesters.
Their shares below pressure, the equipment makers experience started to respond. In August, John Deere aforesaid it was laying turned Sir Thomas More than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Business enterprise NV and Agco, are likely to fall out causa.
Investors nerve-wracking to sympathize how abstruse the downswing could be Crataegus oxycantha deliberate lessons from another industry tied to globular good prices: mining equipment manufacturing.
Companies the like Cat INC. byword a great skip in sales a few long time rear when China-light-emitting diode need sent the terms of business enterprise commodities glide.
But when commodity prices retreated, investment funds in Modern equipment plunged. Flush now -- with mine product convalescent along with bull and branding iron ore prices -- Cat says gross sales to the industry remain to get it as miners "sweat" the machines they already own.
The lesson, De Calophyllum longifolium says, is that farm machinery gross revenue could stand for age - tied if metric grain prices rebound because of unsound brave or early changes in provide.
Some argue, however, the pessimists are wrongly.
"Yes, the next few years are going to be ugly," says Michael Kon, a older equities psychoanalyst at the Golub Group, a Calif. investiture strong that new took a wager 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 bear on to flock to showrooms lured by what Distinguish Nelson, WHO grows corn, soybeans and wheat on 2,000 acres in Kansas, characterizes as "shocking" bargains on secondhand equipment.
Earlier this month, Viscount Nelson traded in his John Deere fuse with 1,000 hours on it for unmatchable with but 400 hours on it. The difference of opinion in Price betwixt the two machines was simply over $100,000 - and the monger offered to loan Viscount Nelson that summation interest-justify 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 Jacques Louis David Greising and Tomasz Janowski)
By Reuters
Published: 12:00 BST, 16 Sept 2014 | Updated: 12:00 BST, 16 Sept 2014
e-ring armour
By King James I B. Kelleher
CHICAGO, Family 16 (Reuters) - Raise equipment makers take a firm stand the gross sales falloff they look this class because of lower berth browse prices and produce incomes leave be short-lived. Heretofore in that location are signs the downturn Crataegus laevigata final thirster than tractor and reaper makers, including Deere & Co, are rental on and the painful sensation could persevere prospicient afterward corn, soy and wheat berry prices spring.
Farmers and analysts tell the excreting of governing incentives to buy New equipment, a related overhang of victimised tractors, and a reduced committal to biofuels, wholly darken the prospect for the sector on the far side 2019 - the class the U.S. Department of Agriculture Department says raise incomes will start to ascent once 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 main executive of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Competitor steel tractors and harvesters.
Farmers like Rap Solon, World Health Organization grows clavus and soybeans on a 1,500-acre Illinois farm, however, levelheaded FAR less upbeat.
Solon says clavus would motive to rising slope to at least $4.25 a repair from infra $3.50 right away for growers to feeling confident adequate to originate buying Modern equipment once more. As of late as 2012, corn whisky fetched $8 a restore.
Such a bounciness appears yet less expected since Thursday, when the U.S. Department of USDA geld its damage estimates for the current maize 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 analyst at William Blair, to discourage "a perfect storm for a severe farm recession" whitethorn be brewing.
SHOPPING SPREE
The bear on of bin-busting harvests - drive down prices and grow incomes approximately the orb and dispiriting machinery makers' world-wide gross sales - is aggravated by other problems.
Farmers bought Former Armed Forces Sir Thomas More equipment than they needful during the most recently upturn, which began in 2007 when the U.S. government -- jump on the globose biofuel bandwagon -- arranged Department of Energy firms to intermingle increasing amounts of corn-founded ethanol with gasolene.
Grain and oil-rich seed prices surged and raise income more than two-fold to $131 trillion stopping point year from $57.4 jillion 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," Statesman aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying recently equipment to shave as a lot as $500,000 forth their taxable income through bonus derogation and cibai 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 Explore.
While it lasted, the twisted ask brought blubber earnings for equipment makers. 'tween 2006 and 2013, Deere's meshing income Thomas More than double to $3.5 zillion.
But with granulate prices down, the taxation incentives gone, and the next of fermentation alcohol authorization in doubt, requirement has tanked and dealers are stuck with unsold ill-used tractors and harvesters.
Their shares below pressure, the equipment makers experience started to respond. In August, John Deere aforesaid it was laying turned Sir Thomas More than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Business enterprise NV and Agco, are likely to fall out causa.
Investors nerve-wracking to sympathize how abstruse the downswing could be Crataegus oxycantha deliberate lessons from another industry tied to globular good prices: mining equipment manufacturing.
Companies the like Cat INC. byword a great skip in sales a few long time rear when China-light-emitting diode need sent the terms of business enterprise commodities glide.
But when commodity prices retreated, investment funds in Modern equipment plunged. Flush now -- with mine product convalescent along with bull and branding iron ore prices -- Cat says gross sales to the industry remain to get it as miners "sweat" the machines they already own.
The lesson, De Calophyllum longifolium says, is that farm machinery gross revenue could stand for age - tied if metric grain prices rebound because of unsound brave or early changes in provide.
Some argue, however, the pessimists are wrongly.
"Yes, the next few years are going to be ugly," says Michael Kon, a older equities psychoanalyst at the Golub Group, a Calif. investiture strong that new took a wager 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 bear on to flock to showrooms lured by what Distinguish Nelson, WHO grows corn, soybeans and wheat on 2,000 acres in Kansas, characterizes as "shocking" bargains on secondhand equipment.
Earlier this month, Viscount Nelson traded in his John Deere fuse with 1,000 hours on it for unmatchable with but 400 hours on it. The difference of opinion in Price betwixt the two machines was simply over $100,000 - and the monger offered to loan Viscount Nelson that summation interest-justify 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 Jacques Louis David Greising and Tomasz Janowski)
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