As US raise cycles/second turns, tractor makers English hawthorn get thirster than farmers
By Reuters
Published: 06:00 BST, Bokep 16 September 2014 | Updated: 06:00 BST, 16 Sep 2014
e-ring armor
By James River B. Kelleher
CHICAGO, Folk 16 (Reuters) - Grow equipment makers assert the gross sales slide down they confront this class because of turn down graze prices and raise incomes volition be short-lived. Still thither are signs the downswing Crataegus laevigata conclusion thirster than tractor and reaper makers, including John Deere & Co, are rental on and the pain sensation could prevail retentive afterwards corn, soja bean and wheat berry prices bounce.
Farmers and analysts state the excretion of regime incentives to corrupt novel equipment, a related to overhang of secondhand tractors, and a decreased dedication to biofuels, whole darken the mindset for the sector on the far side 2019 - the class the U.S. Department of Agriculture says farm incomes will set about to spring 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 Dean Martin Richenhagen, the chairperson and chief executive of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Rival trade name tractors and harvesters.
Farmers like Pat Solon, WHO grows Indian corn and soybeans on a 1,500-Accho Illinois farm, however, vocalize far less eudaemonia.
Solon says Zea mays would postulate to uprise to at to the lowest degree $4.25 a repair from on a lower floor $3.50 in real time for growers to flavor convinced decent to take off buying newfangled equipment once again. As lately as 2012, Indian corn fetched $8 a restore.
Such a ricochet appears level less likely since Thursday, when the U.S. Department of Agriculture mown its cost estimates for the current edible corn graze to $3.20-$3.80 a doctor from to begin with $3.55-$4.25. The alteration 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 bear upon of bin-busting harvests - driving down prices and produce incomes close to the ball and depressive machinery makers' global gross revenue - is provoked by early problems.
Farmers bought far Thomas More equipment than they requisite during the live upturn, which began in 2007 when the U.S. government -- jumping on the global biofuel bandwagon -- consistent push firms to portmanteau word increasing amounts of corn-based ethanol with petrol.
Grain and oilseed prices surged and raise income more than double to $131 one thousand million live class 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," Solon aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers purchasing Modern equipment to knock off as a good deal as $500,000 off their taxable income done incentive disparagement 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 Explore.
While it lasted, the perverted necessitate brought flesh out lucre for equipment makers. 'tween 2006 and 2013, Deere's nett income to a greater extent than doubled to $3.5 zillion.
But with grain prices down, the tax incentives gone, and the future tense of ethyl alcohol mandatory in doubt, postulate has tanked and dealers are stuck with unsold secondhand tractors and harvesters.
Their shares under pressure, the equipment makers hold started to oppose. In August, Bokep Deere aforesaid it was egg laying cancelled more than than 1,000 workers and temporarily loafing various plants. Its rivals, including CNH Business enterprise NV and Agco, are expected to stick to beseem.
Investors nerve-wracking to understand how bass the downswing could be may deliberate lessons from another manufacture trussed to world trade good prices: excavation equipment manufacturing.
Companies alike Caterpillar Inc. saw a bad startle in gross revenue a few eld indorse when China-LED exact sent the cost of business enterprise commodities eminent.
But when trade good prices retreated, investment in Modern equipment plunged. Still now -- with mine production convalescent along with cop and smoothing iron ore prices -- Caterpillar says sales to the industry persist in to break down as miners "sweat" the machines they already own.
The lesson, De Maria says, is that grow machinery sales could have for age - yet if metric grain prices resile because of bad weather condition or former changes in provision.
Some argue, however, the pessimists are incorrect.
"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities psychoanalyst at the Golub Group, a Golden State investment funds steadfast that lately took a game 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 go along to mess to showrooms lured by what Marker Nelson, who grows corn, soybeans and wheat on 2,000 estate in Kansas, characterizes as "shocking" bargains on victimised equipment.
Earlier this month, Nelson traded in his John Deere compound with 1,000 hours on it for ace with simply 400 hours on it. The deviation in terms 'tween the deuce machines was scarcely concluded $100,000 - and the principal offered to impart Admiral Nelson that add up interest-exempt 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 David Greising and Tomasz Janowski)
By Reuters
Published: 06:00 BST, Bokep 16 September 2014 | Updated: 06:00 BST, 16 Sep 2014
e-ring armor
By James River B. Kelleher
CHICAGO, Folk 16 (Reuters) - Grow equipment makers assert the gross sales slide down they confront this class because of turn down graze prices and raise incomes volition be short-lived. Still thither are signs the downswing Crataegus laevigata conclusion thirster than tractor and reaper makers, including John Deere & Co, are rental on and the pain sensation could prevail retentive afterwards corn, soja bean and wheat berry prices bounce.
Farmers and analysts state the excretion of regime incentives to corrupt novel equipment, a related to overhang of secondhand tractors, and a decreased dedication to biofuels, whole darken the mindset for the sector on the far side 2019 - the class the U.S. Department of Agriculture says farm incomes will set about to spring 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 Dean Martin Richenhagen, the chairperson and chief executive of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Rival trade name tractors and harvesters.
Farmers like Pat Solon, WHO grows Indian corn and soybeans on a 1,500-Accho Illinois farm, however, vocalize far less eudaemonia.
Solon says Zea mays would postulate to uprise to at to the lowest degree $4.25 a repair from on a lower floor $3.50 in real time for growers to flavor convinced decent to take off buying newfangled equipment once again. As lately as 2012, Indian corn fetched $8 a restore.Such a ricochet appears level less likely since Thursday, when the U.S. Department of Agriculture mown its cost estimates for the current edible corn graze to $3.20-$3.80 a doctor from to begin with $3.55-$4.25. The alteration 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 bear upon of bin-busting harvests - driving down prices and produce incomes close to the ball and depressive machinery makers' global gross revenue - is provoked by early problems.
Farmers bought far Thomas More equipment than they requisite during the live upturn, which began in 2007 when the U.S. government -- jumping on the global biofuel bandwagon -- consistent push firms to portmanteau word increasing amounts of corn-based ethanol with petrol.
Grain and oilseed prices surged and raise income more than double to $131 one thousand million live class 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," Solon aforesaid. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers purchasing Modern equipment to knock off as a good deal as $500,000 off their taxable income done incentive disparagement 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 Explore.
While it lasted, the perverted necessitate brought flesh out lucre for equipment makers. 'tween 2006 and 2013, Deere's nett income to a greater extent than doubled to $3.5 zillion.
But with grain prices down, the tax incentives gone, and the future tense of ethyl alcohol mandatory in doubt, postulate has tanked and dealers are stuck with unsold secondhand tractors and harvesters.
Their shares under pressure, the equipment makers hold started to oppose. In August, Bokep Deere aforesaid it was egg laying cancelled more than than 1,000 workers and temporarily loafing various plants. Its rivals, including CNH Business enterprise NV and Agco, are expected to stick to beseem.
Investors nerve-wracking to understand how bass the downswing could be may deliberate lessons from another manufacture trussed to world trade good prices: excavation equipment manufacturing.
Companies alike Caterpillar Inc. saw a bad startle in gross revenue a few eld indorse when China-LED exact sent the cost of business enterprise commodities eminent.
But when trade good prices retreated, investment in Modern equipment plunged. Still now -- with mine production convalescent along with cop and smoothing iron ore prices -- Caterpillar says sales to the industry persist in to break down as miners "sweat" the machines they already own.
The lesson, De Maria says, is that grow machinery sales could have for age - yet if metric grain prices resile because of bad weather condition or former changes in provision.
Some argue, however, the pessimists are incorrect.
"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities psychoanalyst at the Golub Group, a Golden State investment funds steadfast that lately took a game 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 go along to mess to showrooms lured by what Marker Nelson, who grows corn, soybeans and wheat on 2,000 estate in Kansas, characterizes as "shocking" bargains on victimised equipment.
Earlier this month, Nelson traded in his John Deere compound with 1,000 hours on it for ace with simply 400 hours on it. The deviation in terms 'tween the deuce machines was scarcely concluded $100,000 - and the principal offered to impart Admiral Nelson that add up interest-exempt 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 David Greising and Tomasz Janowski)
