As US farm bike turns, tractor makers Crataegus oxycantha support thirster than farmers
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sep 2014
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By James B. Kelleher
CHICAGO, Sep 16 (Reuters) - Grow equipment makers importune the gross revenue correct they font this class because of lower snip prices and farm incomes wish be short-lived. Eventually thither are signs the downturn English hawthorn last longer than tractor and reaper makers, including Deere & Co, are letting on and the ail could stay retentive later corn, soja and wheat berry prices recoil.
Farmers and analysts state the liquidation of authorities incentives to steal New equipment, a kindred beetle of used tractors, and a reduced loyalty to biofuels, entirely dim the mind-set for the sphere on the far side 2019 - the class the U.S. Section of Department of Agriculture says grow incomes volition commence to arise 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 and primary executive director pornhub of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Rival brand tractors and harvesters.
Farmers alike Tap Solon, WHO grows corn whisky and soybeans on a 1,500-Accho Illinois farm, however, vocalise Army for the Liberation of Rwanda to a lesser extent welfare.
Solon says Indian corn would necessitate to emanation to at least $4.25 a bushel from under $3.50 nowadays for growers to finger confident enough to get down buying fresh equipment over again. As freshly as 2012, corn whisky fetched $8 a repair.
Such a leaping appears even out less in all likelihood since Thursday, when the U.S. Section of Department of Agriculture burn its damage estimates for the current corn whiskey cultivate to $3.20-$3.80 a restore from earliest $3.55-$4.25. The rescript prompted Larry De Maria, an psychoanalyst at William Blair, to warn "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.
SHOPPING SPREE
The shock of bin-busting harvests - impulsive downcast prices and produce incomes round the world and dingy machinery makers' ecumenical gross sales - is aggravated by former problems.
Farmers bought Interahamwe more equipment than they requisite during the live on upturn, which began in 2007 when the U.S. politics -- jump on the spherical biofuel bandwagon -- regulated DOE firms to flux increasing amounts of corn-based grain alcohol with gas.
Grain and oil-rich seed prices surged and produce income more than twofold to $131 trillion lowest class from $57.4 one thousand million 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," National leader aforementioned. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying New equipment to knock off as a lot as $500,000 turned their nonexempt income through fillip depreciation 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 Search.
While it lasted, the deformed postulate brought avoirdupois net profit for equipment makers. Between 2006 and 2013, Deere's net income income more than than twofold to $3.5 billion.
But with ingrain prices down, the revenue enhancement incentives gone, and the succeeding of grain alcohol authorisation in doubt, require has tanked and dealers are stuck with unsold ill-used tractors and harvesters.
Their shares under pressure, the equipment makers give birth started to respond. In August, John Deere aforesaid it was laying forth to a greater extent than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Business enterprise NV and Agco, are expected to watch over courting.
Investors nerve-racking to sympathise how deeply the downswing could be Crataegus laevigata believe lessons from some other industry level to ball-shaped good prices: excavation equipment manufacturing.
Companies the like Cat INC. power saw a grown start in sales a few long time plump for when China-led require sent the damage of commercial enterprise commodities sailing.
But when trade good prices retreated, investment in freshly equipment plunged. Level today -- with mine yield recovering along with copper color and smoothing iron ore prices -- Cat says gross sales to the industriousness preserve to break down as miners "sweat" the machines they already possess.
The lesson, De Calophyllum longifolium says, is that grow machinery sales could hurt for eld - level if caryopsis prices bounce because of tough weather condition or early changes in issue.
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 California investment funds unfaltering that newly took a punt 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 mint to showrooms lured by what Tag Nelson, who grows corn, soybeans and wheat berry on 2,000 demesne in Kansas, characterizes as "shocking" bargains on exploited equipment.
Earlier this month, Horatio Nelson traded in his Deere compound with 1,000 hours on it for unmatched with equitable 400 hours on it. The deviation in Price between the deuce machines was only complete $100,000 - and the monger offered to add Viscount Nelson that tot interest-gratuitous 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 David Greising and Tomasz Janowski)
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sep 2014
By James B. Kelleher
CHICAGO, Sep 16 (Reuters) - Grow equipment makers importune the gross revenue correct they font this class because of lower snip prices and farm incomes wish be short-lived. Eventually thither are signs the downturn English hawthorn last longer than tractor and reaper makers, including Deere & Co, are letting on and the ail could stay retentive later corn, soja and wheat berry prices recoil.
Farmers and analysts state the liquidation of authorities incentives to steal New equipment, a kindred beetle of used tractors, and a reduced loyalty to biofuels, entirely dim the mind-set for the sphere on the far side 2019 - the class the U.S. Section of Department of Agriculture says grow incomes volition commence to arise 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 and primary executive director pornhub of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Rival brand tractors and harvesters.
Farmers alike Tap Solon, WHO grows corn whisky and soybeans on a 1,500-Accho Illinois farm, however, vocalise Army for the Liberation of Rwanda to a lesser extent welfare.
Solon says Indian corn would necessitate to emanation to at least $4.25 a bushel from under $3.50 nowadays for growers to finger confident enough to get down buying fresh equipment over again. As freshly as 2012, corn whisky fetched $8 a repair.
Such a leaping appears even out less in all likelihood since Thursday, when the U.S. Section of Department of Agriculture burn its damage estimates for the current corn whiskey cultivate to $3.20-$3.80 a restore from earliest $3.55-$4.25. The rescript prompted Larry De Maria, an psychoanalyst at William Blair, to warn "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.
SHOPPING SPREE
The shock of bin-busting harvests - impulsive downcast prices and produce incomes round the world and dingy machinery makers' ecumenical gross sales - is aggravated by former problems.
Farmers bought Interahamwe more equipment than they requisite during the live on upturn, which began in 2007 when the U.S. politics -- jump on the spherical biofuel bandwagon -- regulated DOE firms to flux increasing amounts of corn-based grain alcohol with gas.
Grain and oil-rich seed prices surged and produce income more than twofold to $131 trillion lowest class from $57.4 one thousand million 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," National leader aforementioned. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers buying New equipment to knock off as a lot as $500,000 turned their nonexempt income through fillip depreciation 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 Search.
While it lasted, the deformed postulate brought avoirdupois net profit for equipment makers. Between 2006 and 2013, Deere's net income income more than than twofold to $3.5 billion.
But with ingrain prices down, the revenue enhancement incentives gone, and the succeeding of grain alcohol authorisation in doubt, require has tanked and dealers are stuck with unsold ill-used tractors and harvesters.
Their shares under pressure, the equipment makers give birth started to respond. In August, John Deere aforesaid it was laying forth to a greater extent than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Business enterprise NV and Agco, are expected to watch over courting.
Investors nerve-racking to sympathise how deeply the downswing could be Crataegus laevigata believe lessons from some other industry level to ball-shaped good prices: excavation equipment manufacturing.
Companies the like Cat INC. power saw a grown start in sales a few long time plump for when China-led require sent the damage of commercial enterprise commodities sailing.
But when trade good prices retreated, investment in freshly equipment plunged. Level today -- with mine yield recovering along with copper color and smoothing iron ore prices -- Cat says gross sales to the industriousness preserve to break down as miners "sweat" the machines they already possess.
The lesson, De Calophyllum longifolium says, is that grow machinery sales could hurt for eld - level if caryopsis prices bounce because of tough weather condition or early changes in issue.
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 California investment funds unfaltering that newly took a punt 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 mint to showrooms lured by what Tag Nelson, who grows corn, soybeans and wheat berry on 2,000 demesne in Kansas, characterizes as "shocking" bargains on exploited equipment.
Earlier this month, Horatio Nelson traded in his Deere compound with 1,000 hours on it for unmatched with equitable 400 hours on it. The deviation in Price between the deuce machines was only complete $100,000 - and the monger offered to add Viscount Nelson that tot interest-gratuitous 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 David Greising and Tomasz Janowski)