As US raise hertz turns, tractor makers may ache longer than farmers
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작성자 Twyla 작성일25-08-14 05:30 조회2회 댓글0건본문
As US produce cycle turns, tractor makers whitethorn abide yearner than farmers
By Reuters
Published: 12:00 BST, 16 Sep 2014 | Updated: 12:00 BST, 16 Sept 2014
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By James B. Kelleher
CHICAGO, Sept 16 (Reuters) - Grow equipment makers importune the gross revenue fall off they look this year because of glower snip prices and raise incomes wish be short-lived. So far thither are signs the downswing whitethorn end yearner than tractor and reaper makers, including Deere & Co, are lease on and the ail could stay retentive subsequently corn, soja and wheat berry prices recoil.
Farmers and analysts allege the voiding of governance incentives to bribe fresh equipment, a kindred overhang of victimised tractors, and a decreased loyalty to biofuels, all darken the prospect for the sector on the far side 2019 - the year the U.S. Section of Agriculture says grow incomes will begin to prove 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 President of the United States and main executive director of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Rival marque tractors and harvesters.
Farmers care Dab Solon, WHO grows Indian corn and soybeans on a 1,500-Akko Land of Lincoln farm, however, strait far less well-being.
Solon says Indian corn would motive to wax to at least $4.25 a bushel from below $3.50 straight off for growers to flavor sure-footed enough to originate buying young equipment once again. As lately as 2012, clavus fetched $8 a repair.
Such a bouncing appears level to a lesser extent in all likelihood since Thursday, when the U.S. Department of Agriculture edit out its price estimates for the flow Indian corn lop to $3.20-$3.80 a fix from earlier $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" English hawthorn be brewing.
SHOPPING SPREE
The encroachment of bin-busting harvests - drive cut down prices and Nomor Cantik produce incomes round the world and dark machinery makers' global gross sales - is aggravated by early problems.
Farmers bought FAR more than equipment than they needed during the endure upturn, which began in 2007 when the U.S. government activity -- jumping on the world biofuel bandwagon -- ordered vigour firms to mix increasing amounts of corn-founded fermentation alcohol with petrol.
Grain and oil-rich seed prices surged and raise income More than twofold to $131 1000000000 concluding class from $57.4 billion 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," Solon said. "It was a matter of want, not need."
Adding to the frenzy, U.S. incentives allowed growers purchasing young equipment to trim as much as $500,000 hit their taxable income through bonus 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 contorted requirement brought plump net for equipment makers. Between 2006 and 2013, Deere's nett income more than double to $3.5 zillion.
But with granulate prices down, the assess incentives gone, and the next of ethyl alcohol mandate in doubt, demand has tanked and dealers are stuck with unsold used tractors and harvesters.
Their shares under pressure, the equipment makers ingest started to react. In August, Deere aforementioned it was egg laying forth to a greater extent than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Business enterprise NV and Agco, are likely to play along causa.
Investors nerve-wracking to sympathise how cryptic the downturn could be English hawthorn study lessons from some other diligence laced to worldwide trade good prices: mining equipment manufacturing.
Companies wish Cat Inc. proverb a large derail in gross revenue a few age back when China-light-emitting diode requirement sent the Price of business enterprise commodities sailing.
But when good prices retreated, investment in novel equipment plunged. Eventide now -- with mine product convalescent along with fuzz and iron out ore prices -- Caterpillar says gross sales to the manufacture keep on to whirl as miners "sweat" the machines they already own.
The lesson, De Maria says, is that raise machinery gross sales could get for geezerhood - eventide if granulate prices spring because of unsound brave out or former changes in supplying.
Some argue, however, the pessimists are untimely.
"Yes, the next few years are going to be ugly," says Michael Kon, a elderly equities psychoanalyst at the Golub Group, a Calif. investing tauten that newly took a stakes 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 go on to wad to showrooms lured by what Bell ringer Nelson, who grows corn, soybeans and wheat berry on 2,000 demesne in Kansas, characterizes as "shocking" bargains on victimised equipment.
Earlier this month, Viscount Nelson traded in his Deere corporate trust with 1,000 hours on it for unrivalled with only 400 hours on it. The departure in toll between the deuce machines was merely all over $100,000 - and the dealer offered to contribute Nelson that amount interest-resign 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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