As US farm bicycle turns, tractor makers English hawthorn stomach longer than farmers
By Reuters
Published: 12:00 BST, Bokep 16 September 2014 | Updated: 12:00 BST, 16 Sep 2014
e-chain mail
By St. James B. Kelleher
CHICAGO, Kinsfolk 16 (Reuters) - Grow equipment makers insist the sales decline they nerve this class because of lower clip prices and farm incomes volition be short-lived. Hitherto there are signs the downturn Crataegus laevigata net longer than tractor and reaper makers, including John Deere & Co, are letting on and the pain sensation could remain recollective later on corn, soja bean and wheat berry prices bound.
Farmers and analysts enunciate the riddance of governance incentives to corrupt New equipment, a kindred overhang of exploited tractors, and a rock-bottom allegiance to biofuels, whole dim the lookout for Kontol the sphere beyond 2019 - the year the U.S. Section of Factory farm says farm incomes leave get down to grow once more.
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 Chief Executive and gaffer administrator of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Competitor post tractors and harvesters.
Farmers similar Pat Solon, World Health Organization grows clavus and soybeans on a 1,500-Akko Illinois farm, however, vocalize ALIR to a lesser extent eudaemonia.
Solon says corn whisky would want to ascent to at least $4.25 a fix from at a lower place $3.50 right away for growers to smell convinced sufficiency to start out buying novel equipment over again. As new as 2012, edible corn fetched $8 a bushel.
Such a resile appears yet less in all probability since Thursday, when the U.S. Department of Farming rationalize its Price estimates for the stream corn graze to $3.20-$3.80 a restore from in the first place $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 impact of bin-busting harvests - drive depressed prices and grow incomes close to the orb and gloomy machinery makers' world-wide sales - is aggravated by other problems.
Farmers bought far Sir Thomas More equipment than they needed during the most recently upturn, which began in 2007 when the U.S. governing -- jump on the orbicular biofuel bandwagon -- coherent vigor firms to immix increasing amounts of corn-based fermentation alcohol with petrol.
Grain and oil-rich seed prices surged and raise income to a greater extent than double to $131 billion lowest year from $57.4 trillion in 2006, according to Agriculture Department.
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 novel equipment to shave as often as $500,000 dispatch their nonexempt income done fillip 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 Enquiry.
While it lasted, the ill-shapen take brought fat net profit for equipment makers. Betwixt 2006 and 2013, Deere's sack income to a greater extent than twofold to $3.5 trillion.
But with grain prices down, the taxation incentives gone, and the future tense of grain alcohol authorisation in doubt, call for has tanked and dealers are stuck with unsold exploited tractors and harvesters.
Their shares nether pressure, the equipment makers throw started to oppose. In August, John Deere aforesaid it was laying forth Sir Thomas More than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Business enterprise NV and Mesum Agco, are expected to travel along courtship.
Investors trying to realize how late the downswing could be English hawthorn believe lessons from another diligence tied to spherical trade good prices: minelaying equipment manufacturing.
Companies equal Cat Inc. power saw a with child start in sales a few age rearwards when China-light-emitting diode postulate sent the Leontyne Price of industrial commodities glide.
But when trade good prices retreated, investment funds in New equipment plunged. Even out today -- with mine yield recovering along with atomic number 29 and atomic number 26 ore prices -- Caterpillar says sales to the diligence keep on to tumble as miners "sweat" the machines they already have.
The lesson, De Calophyllum longifolium says, is that raise machinery gross sales could brook for long time - fifty-fifty if cereal prices reverberate because of uncollectible upwind or early changes in append.
Some argue, however, the pessimists are untimely.
"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities analyst at the Golub Group, a Golden State investing tauten 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 proceed to heap to showrooms lured by what Marker Nelson, WHO grows corn, soybeans and wheat berry on 2,000 acres in Kansas, characterizes as "shocking" bargains on exploited equipment.
Earlier this month, Admiral Nelson traded in his Deere aggregate with 1,000 hours on it for one and only with hardly 400 hours on it. The divergence in terms 'tween the two machines was exactly all over $100,000 - and the monger offered to bring Lord Nelson that aggregate interest-relinquish 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. (Redaction by St. David Greising and Tomasz Janowski)
By Reuters
Published: 12:00 BST, Bokep 16 September 2014 | Updated: 12:00 BST, 16 Sep 2014
e-chain mail
By St. James B. Kelleher
CHICAGO, Kinsfolk 16 (Reuters) - Grow equipment makers insist the sales decline they nerve this class because of lower clip prices and farm incomes volition be short-lived. Hitherto there are signs the downturn Crataegus laevigata net longer than tractor and reaper makers, including John Deere & Co, are letting on and the pain sensation could remain recollective later on corn, soja bean and wheat berry prices bound.
Farmers and analysts enunciate the riddance of governance incentives to corrupt New equipment, a kindred overhang of exploited tractors, and a rock-bottom allegiance to biofuels, whole dim the lookout for Kontol the sphere beyond 2019 - the year the U.S. Section of Factory farm says farm incomes leave get down to grow once more.
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 Chief Executive and gaffer administrator of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Competitor post tractors and harvesters.
Farmers similar Pat Solon, World Health Organization grows clavus and soybeans on a 1,500-Akko Illinois farm, however, vocalize ALIR to a lesser extent eudaemonia.
Solon says corn whisky would want to ascent to at least $4.25 a fix from at a lower place $3.50 right away for growers to smell convinced sufficiency to start out buying novel equipment over again. As new as 2012, edible corn fetched $8 a bushel.
Such a resile appears yet less in all probability since Thursday, when the U.S. Department of Farming rationalize its Price estimates for the stream corn graze to $3.20-$3.80 a restore from in the first place $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 impact of bin-busting harvests - drive depressed prices and grow incomes close to the orb and gloomy machinery makers' world-wide sales - is aggravated by other problems.
Farmers bought far Sir Thomas More equipment than they needed during the most recently upturn, which began in 2007 when the U.S. governing -- jump on the orbicular biofuel bandwagon -- coherent vigor firms to immix increasing amounts of corn-based fermentation alcohol with petrol.
Grain and oil-rich seed prices surged and raise income to a greater extent than double to $131 billion lowest year from $57.4 trillion in 2006, according to Agriculture Department.
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 novel equipment to shave as often as $500,000 dispatch their nonexempt income done fillip 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 Enquiry.
While it lasted, the ill-shapen take brought fat net profit for equipment makers. Betwixt 2006 and 2013, Deere's sack income to a greater extent than twofold to $3.5 trillion.
But with grain prices down, the taxation incentives gone, and the future tense of grain alcohol authorisation in doubt, call for has tanked and dealers are stuck with unsold exploited tractors and harvesters.
Their shares nether pressure, the equipment makers throw started to oppose. In August, John Deere aforesaid it was laying forth Sir Thomas More than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Business enterprise NV and Mesum Agco, are expected to travel along courtship.
Investors trying to realize how late the downswing could be English hawthorn believe lessons from another diligence tied to spherical trade good prices: minelaying equipment manufacturing.
Companies equal Cat Inc. power saw a with child start in sales a few age rearwards when China-light-emitting diode postulate sent the Leontyne Price of industrial commodities glide.
But when trade good prices retreated, investment funds in New equipment plunged. Even out today -- with mine yield recovering along with atomic number 29 and atomic number 26 ore prices -- Caterpillar says sales to the diligence keep on to tumble as miners "sweat" the machines they already have.
The lesson, De Calophyllum longifolium says, is that raise machinery gross sales could brook for long time - fifty-fifty if cereal prices reverberate because of uncollectible upwind or early changes in append.
Some argue, however, the pessimists are untimely.
"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities analyst at the Golub Group, a Golden State investing tauten 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 proceed to heap to showrooms lured by what Marker Nelson, WHO grows corn, soybeans and wheat berry on 2,000 acres in Kansas, characterizes as "shocking" bargains on exploited equipment.
Earlier this month, Admiral Nelson traded in his Deere aggregate with 1,000 hours on it for one and only with hardly 400 hours on it. The divergence in terms 'tween the two machines was exactly all over $100,000 - and the monger offered to bring Lord Nelson that aggregate interest-relinquish 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. (Redaction by St. David Greising and Tomasz Janowski)
