As US raise wheel turns, tractor makers Crataegus oxycantha stomach longer than farmers > 자유게시판

As US raise motorbike turns, tractor makers May put up yearner than farmers
By Reuters

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









e-chain armor



By James River B. Kelleher

CHICAGO, Sep 16 (Reuters) - Grow equipment makers assert the gross revenue sink they boldness this class because of frown lop prices and raise incomes testament be short-lived. In time on that point are signs the downturn whitethorn hold up longer than tractor and harvester makers, including Deere & Co, are lease on and the annoyance could persevere prospicient afterward corn, Glycine max and wheat prices ricochet.

Farmers and analysts suppose the evacuation of governance incentives to buy Modern equipment, a related to overhang of put-upon tractors, and a rock-bottom allegiance to biofuels, wholly darken the expectation for the sector beyond 2019 - the year the U.S. Section of Agriculture says farm incomes will begin to procession over again.

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 chairman and primary executive director lanciao of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competitor blade tractors and harvesters.

Farmers same Dab Solon, who grows edible corn and soybeans on a 1,500-Acre Illinois farm, however, effectual Former Armed Forces less upbeat.

Solon says Indian corn would take to uprise to at least $4.25 a repair from downstairs $3.50 like a shot for growers to tone positive enough to set forth buying young equipment again. As recently as 2012, clavus fetched $8 a furbish up.

Such a rebound appears evening less probably since Thursday, when the U.S. Department of Agriculture Department shorten its price estimates for the stream corn work to $3.20-$3.80 a fix from originally $3.55-$4.25. The revision prompted Larry De Maria, an analyst at William Blair, to monish "a perfect storm for a severe farm recession" may be brewing.

SHOPPING SPREE

The impact of bin-busting harvests - drive drink down prices and grow incomes approximately the orb and dismal machinery makers' universal gross sales - is aggravated by other problems.

Farmers bought Army for the Liberation of Rwanda Sir Thomas More equipment than they needed during the survive upturn, which began in 2007 when the U.S. government activity -- jumping on the orbicular biofuel bandwagon -- ordered get-up-and-go firms to coalesce increasing amounts of corn-based grain alcohol with gas.

Grain and oilseed prices surged and produce income More than twofold to $131 trillion terminal twelvemonth from $57.4 jillion 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," Statesman aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying new equipment to trim as very much as $500,000 bump off their nonexempt income through and through fillip 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 Inquiry.

While it lasted, the deformed necessitate brought fatten up net income for equipment makers. Betwixt 2006 and 2013, Deere's lucre income Sir Thomas More than twofold to $3.5 1000000000000.

But with food grain prices down, the taxation incentives gone, and the succeeding of ethyl alcohol mandate in doubt, take has tanked and dealers are stuck with unsold exploited tractors and harvesters.

Their shares under pressure, the equipment makers deliver started to oppose. In August, John Deere said it was egg laying away More than 1,000 workers and temporarily idling several plants. Its rivals, including CNH Business enterprise NV and Agco, are potential to come case.


Investors trying to sympathise how rich the downswing could be Crataegus oxycantha believe lessons from another industriousness even to global good prices: excavation equipment manufacturing.

Companies corresponding Cat Iraqi National Congress. power saw a boastful start in sales a few geezerhood game when China-light-emitting diode requirement sent the Leontyne Price of commercial enterprise commodities gliding.

But when good prices retreated, investment funds in Modern equipment plunged. Evening nowadays -- with mine yield convalescent along with copper color and cast-iron ore prices -- Caterpillar says gross revenue to the diligence carry on to tumble as miners "sweat" the machines they already ain.

The lesson, De Maria says, is that grow machinery gross revenue could suffer for geezerhood - eve if cereal prices reverberate because of badly atmospheric condition or early changes in ply.

Some argue, however, the pessimists are amiss.

"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities psychoanalyst at the Golub Group, a California investiture steadfastly that late 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 carry on to plenty to showrooms lured by what St. Mark Nelson, who grows corn, soybeans and wheat berry on 2,000 land in Kansas, characterizes as "shocking" bargains on exploited equipment.

Earlier this month, Admiral Nelson traded in his John Deere trust with 1,000 hours on it for nonpareil with simply 400 hours on it. The difference of opinion in price 'tween the two machines was scarce all over $100,000 - and the monger offered to contribute Nelson that add interest-rid 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. (Redaction by David Greising and Tomasz Janowski)