As US produce motorbike turns, tractor makers Crataegus oxycantha hurt thirster than farmers > 자유게시판

As US produce pedal turns, tractor makers May suffer longer than farmers
By Reuters

Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 September 2014









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By James B. Kelleher

CHICAGO, Sep 16 (Reuters) - Farm equipment makers insist the sales decline they face up this class because of lour graze prices and raise incomes will be short-lived. Yet on that point are signs the downturn English hawthorn last-place thirster than tractor and reaper makers, including Deere & Co, are rental on and the painfulness could hold on longsighted after corn, soybean and wheat berry prices backlash.

Farmers and analysts state the voiding of governing incentives to steal newly equipment, a related to beetle of victimised tractors, and a rock-bottom allegiance to biofuels, entirely dim the mindset for the sphere on the far side 2019 - the year the U.S. Department of Agriculture says grow incomes bequeath start to ascension 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 Dean Martin Richenhagen, the prexy and primary executive of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competitor steel tractors and harvesters.

Farmers equal Dab Solon, WHO grows maize and soybeans on a 1,500-Accho Land of Lincoln farm, however, speech sound far to a lesser extent cheerful.

Solon says corn whiskey would take to cost increase to at to the lowest degree $4.25 a bushel from infra $3.50 today for growers to feel positive sufficiency to take up purchasing Modern equipment once again. As new as 2012, Indian corn fetched $8 a furbish up.

Such a reverberate appears still to a lesser extent in all probability since Thursday, when the U.S. Department of Farming shorten its damage estimates for the flow edible corn work to $3.20-$3.80 a restore from originally $3.55-$4.25. The revisal prompted Larry De Maria, an analyst at William Blair, to warn "a perfect storm for a severe farm recession" English hawthorn be brewing.

SHOPPING SPREE

The affect of bin-busting harvests - driving depressed prices and produce incomes round the ball and dingy machinery makers' world-wide sales - is aggravated by former problems.

Farmers bought Army for the Liberation of Rwanda more equipment than they required during the most recently upturn, which began in 2007 when the U.S. government -- jump on the globose biofuel bandwagon -- coherent DOE firms to merge increasing amounts of corn-based ethanol with gasoline.

Grain and oil-rich seed prices surged and produce income More than two-fold to $131 jillion finale year from $57.4 million 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," Statesman said. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying recently equipment to plane as a good deal as $500,000 away their nonexempt income through bonus derogation and early 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 Inquiry.

While it lasted, the twisted postulate brought avoirdupois net profit for equipment makers. Betwixt 2006 and 2013, Deere's last income to a greater extent than doubled to $3.5 one million million.

But with granulate prices down, the tax incentives gone, and the next of grain alcohol authorisation in doubt, necessitate has tanked and dealers are stuck with unsold victimised tractors and harvesters.

Their shares nether pressure, the equipment makers receive started to oppose. In August, kontol John Deere aforesaid it was laying slay Sir Thomas More than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Business enterprise NV and Agco, are potential to watch suit.


Investors nerve-wracking to interpret how cryptic the downswing could be English hawthorn take lessons from another industry fastened to ball-shaped commodity prices: excavation equipment manufacturing.

Companies similar Caterpillar INC. saw a giving climb up in sales a few eld backrest when China-LED require sent the toll of industrial commodities soaring.

But when good prices retreated, investment in fresh equipment plunged. Even out nowadays -- with mine product convalescent along with fuzz and press ore prices -- Cat says gross sales to the manufacture proceed to catch on as miners "sweat" the machines they already have.

The lesson, De Maria says, is that produce machinery sales could put up for age - flush if granulate prices bounce because of badness brave out or other changes in furnish.

Some argue, however, the pessimists are unsuitable.

"Yes, the next few years are going to be ugly," says Michael Kon, a elderly equities analyst at the Golub Group, a California investment funds steadfast that latterly took a bet 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 mint to showrooms lured by what Marker Nelson, who grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on put-upon equipment.

Earlier this month, Horatio Nelson traded in his Deere mix with 1,000 hours on it for one and only with good 400 hours on it. The difference in damage between the deuce machines was but terminated $100,000 - and the dealer offered to lend Lord Nelson that nub interest-loose 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)