Compact Tractor sales Off 31%

[Blee25]

I don't think you understand that a high corn price is very hard on the dairy industry, Beef Cattle, Poultry industry & Pork producers. Be ready to see premium cuts of beef to double in price. These corn prices may also drive cola MFG's back to sugar.

Also, for every sent that the price of grain has gone up so has the price of every type of imput. Even corn/soybean farmers aren't ended up with much more money in there pocket then a couple years ago. The beef, pork, dairy, farmers have to be feeling the hurt.

 

[Builder]

I don't think you understand that a high corn price is very hard on the dairy industry, Beef Cattle, Poultry industry & Pork producers. Be ready to see premium cuts of beef to double in price. These corn prices may also drive cola MFG's back to sugar.

OK, I understand that, but how about all the corn farmers? How they doing with these increased profits? Rice & wheat are up, too? Doesn't that line their pockets with more money? Sure it does.

If I'm incorrect, then who's buying all the extra 100+ HP farm tractors in the US?

 

[john_bud]

Don't forget that WORLD demand for small grains is up. I wonder if the weak USD is quieting the demand for the <50hp machines which are 100% imported? Also "real" farmers are able to buy more with the generous depreciation in the stimulus package, so them getting a larger tractor makes sense.



Actual acreage of corn is steady to dropping from what I hear. Beans and wheat are up. There is more land being returned to production also. You do know that there are many many many less acres under production to help keep prices up and that those programs are still being funded? What a government.... prices way up and farmers still paid to not farm!


jb

 

[Farmwithjunk]

OK, I understand that, but how about all the corn farmers? How they doing with these increased profits? Rice & wheat are up, too? Doesn't that line their pockets with more money? Sure it does.

If I'm incorrect, then who's buying all the extra 100+ HP farm tractors in the US?

There's a fine line between "increased profits" and actually turning a profit for the first time in years. The recent raise in commodity prices is merely giving SOME farmers a chance to replace a lot of older equipment, pay off SOME debts, and regroup. Even with grain prices doubling, inputs and operating cost's have kept pace with the additional income. Land prices (both purchase and rental/lease) have skyrocketed.

The hopes (false hopes?) that increased grain sales dollars are here to stay have sent a lot of farmers out in search of more land, more equipment, and with that, more DEBT. One only needs to look back to the late 1970's to see a parallel in history....... The run-up to the farm crisis of the 1980's.......

So, YES, grain prices are responsible for recent increased sales of 100+hp tractors, but those increased grain prices might not be a true indicator of "GREAT DAYS AHEAD" for farmers. More of a blip on the radar screen indicating trouble ahead.

 

[riptides]

The hopes (false hopes?) that increased grain sales dollars are here to stay have sent a lot of farmers out in search of more land, more equipment, and with that, more DEBT. One only needs to look back to the late 1970's to see a parallel in history....... The run-up to the farm crisis of the 1980's.......

The current problem is that banks are going bust on lending. You cannot get into DEBT anymore. And the DEBT you owe is probably more that your assets are worth. Hence, people are finding it easier to walk away from their current DEBT.

Land prices are somewhat stable. House prices are free-falling.

-Mike Z.

 

[Farmwithjunk]

The current problem is that banks are going bust on lending. You cannot get into DEBT anymore. And the DEBT you owe is probably more that your assets are worth. Hence, people are finding it easier to walk away from their current DEBT.

Land prices are somewhat stable. House prices are free-falling.

-Mike Z.

While that may be true in the housing market, farm credit is still readily available. It has been for years. Equipment manufacturers still offer their own credit to "qualified customers". Many farmers locked in to credit obligations over the past few years and are commited to them through thick or thin. With the increase in commodity prices, MOST farmers are seeing their rent raised by land owners who want a piece of the action. Average per acre land rental has gone up over 50% in this area in 2 years. Farm ground has been swallowed up by developement for ages. They don't make MORE farm land. Prices on GOOD farm ground have risen and continue to do so as more land is taken out of production.

From someone who 2 years ago sold 190 acres for 33 times what I paid for it 30 years earlier, I'm fairly convinced land values are indeed rising at a staggering rate. I took part of the proceeds from that sale and bought 45 acres. 2 years later, I'm entertaining offers nearly double that investment. They're still rising.

There's quite a few of us who have "BTDT" during the 80's who saw our friends loose farms, their credit (and lives) ruined by the fallout of a situation oh, so simular as what is occuring in the ag world right now.

 

[Builder]

Look at loading docks at a major ports. The ones near where I live have lots of new green & red tractors sitting there waiting to get on big ships and find new homes where different languages are spoken. Coincidentally, where they are going, they have currencies that buy more dollars than they did 3-5 years ago.

What that means is that America is exporting more tractors, one of the reasons sales are up on 100+ HP.

Higher farm land values just give farmers a more valuable asset to borrow more money for more new 100+ HP tractors.

 

[Farmwithjunk]

Higher farm land values just give farmers a more valuable asset to borrow more money for more new 100+ HP tractors.

That works to the farmers advantage when, (A) they OWN the land, as opposed to renting, MOST cash grain farm land in the US is rented. And (B) when the AG economy is on the upswing. Hit a downturn and that very same "advantage" just turned into runaway debt. Anyone who farmed throught the 1980's can attest to that. At least the ones that didn't put a bullit through their temple.

 

[riptides]

An interesting commentary on the economic climate is posted in the link.
It is any easy read (not lengthy, no big confusing words) but offers no solutions other than what is painfully happening today.

Armageddon?

 

[BungeeII]

Read the first paragraph here and tell me if it doesn't sound familiar.

The Main Causes of the Great Depression

Speculators had their money in the mortgage market and are now throwing it into oil. We're in a recession and the cost of living increases are pinching everyone who's not solidly in the middle class or higher. I'm not smart enough to say what's going to happen, and it's been a long time since I was in school, but I thought recent market developments sounded familiar.