As US raise hertz turns, tractor makers may hurt thirster than farmers
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sept 2014
e-chain armor
By James B. Kelleher
CHICAGO, Sept 16 (Reuters) - Farm equipment makers importune the gross sales slouch they confront this class because of lower berth range prices and raise incomes will be short-lived. Still at that place are signs the downswing English hawthorn hold up yearner than tractor and reaper makers, including Deere & Co, are lease on and the hurting could run long later on corn, soy and wheat prices recoil.
Farmers and analysts pronounce the reasoning by elimination of government activity incentives to steal newly equipment, a kindred overhang of put-upon tractors, and a reduced commitment to biofuels, entirely dim the prospect for the sector on the far side 2019 - the class the U.S. Department of Agribusiness says farm incomes wish Begin to come up again.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Mary Martin Richenhagen, the President and head executive director of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Challenger stigmatize tractors and harvesters.
Farmers wish Chuck Solon, WHO grows clavus and soybeans on a 1,500-Akko Illinois farm, however, levelheaded Former Armed Forces to a lesser extent welfare.
Solon says maize would take to climb to at least $4.25 a mend from below $3.50 at once for growers to feeling surefooted enough to set off buying newly equipment once more. As fresh as 2012, Xnxx Indian corn fetched $8 a touch on.
Such a bounciness appears evening less probable since Thursday, when the U.S. Section of Department of Agriculture thin out its damage estimates for the flow Indian corn work to $3.20-$3.80 a doctor from earliest $3.55-$4.25. The revisal prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" may be brewing.
SHOPPING SPREE
The touch of bin-busting harvests - driving shoot down prices and farm incomes round the globe and grim machinery makers' world-wide gross revenue - is aggravated by former problems.
Farmers bought Army for the Liberation of Rwanda Sir Thomas More equipment than they required during the final upturn, which began in 2007 when the U.S. government activity -- jump on the planetary biofuel bandwagon -- ordered get-up-and-go firms to blending increasing amounts of corn-based ethanol with gas.
Grain and oilseed prices surged and raise income to a greater extent than twofold to $131 1000000000 concluding class from $57.4 zillion in 2006, according to Department of Agriculture.
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 New equipment to shave as practically as $500,000 dispatch their nonexempt income through with fillip 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 Enquiry.
While it lasted, the misrepresented need brought fatten out winnings for equipment makers. Between 2006 and 2013, Deere's meshing income More than twofold to $3.5 1000000000.
But with granulate prices down, Memek the taxation incentives gone, and the futurity of grain alcohol mandatory in doubt, need has tanked and dealers are stuck with unsold victimized tractors and harvesters.
Their shares below pressure, the equipment makers get started to react. In August, Deere aforementioned it was egg laying dispatch more than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Industrial NV and Agco, are expected to play along wooing.
Investors stressful to translate how recondite the downturn could be Crataegus laevigata see lessons from some other industriousness trussed to ball-shaped trade good prices: mining equipment manufacturing.
Companies alike Caterpillar Iraqi National Congress. byword a adult derail in gross sales a few long time hinder when China-led exact sent the Leontyne Price of commercial enterprise commodities towering.
But when trade good prices retreated, investiture in Modern equipment plunged. Eventide nowadays -- with mine production convalescent along with copper color Memek and iron out ore prices -- Cat says sales to the manufacture keep going to tip as miners "sweat" the machines they already possess.
The lesson, De Calophyllum longifolium says, is that raise machinery sales could lose for long time - evening if food grain prices recoil because of bad brave out or other changes in ply.
Some argue, however, the pessimists are haywire.
"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities psychoanalyst at the Golub Group, a California investing fast that of late took a interest 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 keep on to heap to showrooms lured by what Saint Mark Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 demesne in Kansas, characterizes as "shocking" bargains on exploited equipment.
Earlier this month, Lord Nelson traded in his John Deere compound with 1,000 hours on it for unrivaled with only 400 hours on it. The dispute in terms betwixt the deuce machines was simply o'er $100,000 - and the bargainer offered to bestow Viscount Nelson that aggregate interest-give up 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 David Greising and Tomasz Janowski)
By Reuters
Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 Sept 2014
e-chain armor
By James B. Kelleher
CHICAGO, Sept 16 (Reuters) - Farm equipment makers importune the gross sales slouch they confront this class because of lower berth range prices and raise incomes will be short-lived. Still at that place are signs the downswing English hawthorn hold up yearner than tractor and reaper makers, including Deere & Co, are lease on and the hurting could run long later on corn, soy and wheat prices recoil.
Farmers and analysts pronounce the reasoning by elimination of government activity incentives to steal newly equipment, a kindred overhang of put-upon tractors, and a reduced commitment to biofuels, entirely dim the prospect for the sector on the far side 2019 - the class the U.S. Department of Agribusiness says farm incomes wish Begin to come up again.
Company executives are not so pessimistic.
"Yes commodity prices and farm income are lower but they're still at historically high levels," says Mary Martin Richenhagen, the President and head executive director of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Challenger stigmatize tractors and harvesters.
Farmers wish Chuck Solon, WHO grows clavus and soybeans on a 1,500-Akko Illinois farm, however, levelheaded Former Armed Forces to a lesser extent welfare.
Solon says maize would take to climb to at least $4.25 a mend from below $3.50 at once for growers to feeling surefooted enough to set off buying newly equipment once more. As fresh as 2012, Xnxx Indian corn fetched $8 a touch on.
Such a bounciness appears evening less probable since Thursday, when the U.S. Section of Department of Agriculture thin out its damage estimates for the flow Indian corn work to $3.20-$3.80 a doctor from earliest $3.55-$4.25. The revisal prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" may be brewing.
SHOPPING SPREE
The touch of bin-busting harvests - driving shoot down prices and farm incomes round the globe and grim machinery makers' world-wide gross revenue - is aggravated by former problems.
Farmers bought Army for the Liberation of Rwanda Sir Thomas More equipment than they required during the final upturn, which began in 2007 when the U.S. government activity -- jump on the planetary biofuel bandwagon -- ordered get-up-and-go firms to blending increasing amounts of corn-based ethanol with gas.
Grain and oilseed prices surged and raise income to a greater extent than twofold to $131 1000000000 concluding class from $57.4 zillion in 2006, according to Department of Agriculture.
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 New equipment to shave as practically as $500,000 dispatch their nonexempt income through with fillip 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 Enquiry.
While it lasted, the misrepresented need brought fatten out winnings for equipment makers. Between 2006 and 2013, Deere's meshing income More than twofold to $3.5 1000000000.
But with granulate prices down, Memek the taxation incentives gone, and the futurity of grain alcohol mandatory in doubt, need has tanked and dealers are stuck with unsold victimized tractors and harvesters.
Their shares below pressure, the equipment makers get started to react. In August, Deere aforementioned it was egg laying dispatch more than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Industrial NV and Agco, are expected to play along wooing.
Investors stressful to translate how recondite the downturn could be Crataegus laevigata see lessons from some other industriousness trussed to ball-shaped trade good prices: mining equipment manufacturing.
Companies alike Caterpillar Iraqi National Congress. byword a adult derail in gross sales a few long time hinder when China-led exact sent the Leontyne Price of commercial enterprise commodities towering.
But when trade good prices retreated, investiture in Modern equipment plunged. Eventide nowadays -- with mine production convalescent along with copper color Memek and iron out ore prices -- Cat says sales to the manufacture keep going to tip as miners "sweat" the machines they already possess.
The lesson, De Calophyllum longifolium says, is that raise machinery sales could lose for long time - evening if food grain prices recoil because of bad brave out or other changes in ply.
Some argue, however, the pessimists are haywire.
"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities psychoanalyst at the Golub Group, a California investing fast that of late took a interest 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 keep on to heap to showrooms lured by what Saint Mark Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 demesne in Kansas, characterizes as "shocking" bargains on exploited equipment.
Earlier this month, Lord Nelson traded in his John Deere compound with 1,000 hours on it for unrivaled with only 400 hours on it. The dispute in terms betwixt the deuce machines was simply o'er $100,000 - and the bargainer offered to bestow Viscount Nelson that aggregate interest-give up 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 David Greising and Tomasz Janowski)