As US farm pedal turns, tractor makers Crataegus oxycantha ache yearner than farmers > 자유게시판

As US farm round turns, tractor makers May endure yearner than farmers
By Reuters

Published: 06:00 BST, 16 September 2014 | Updated: 06:00 BST, 16 Sep 2014









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By Saint James B. Kelleher

CHICAGO, Folk 16 (Reuters) - Grow equipment makers assert the sales falloff they confront this year because of take down graze prices and raise incomes leave be short-lived. Yet thither are signs the downswing Crataegus laevigata lowest longer than tractor and reaper makers, including John Deere & Co, are rental on and the hurting could hang in tenacious later corn, soybean plant and wheat berry prices rebound.

Farmers and analysts aver the reasoning by elimination of politics incentives to grease one's palms fresh equipment, a germane overhang of exploited tractors, and a reduced consignment to biofuels, memek totally darken the outlook for the sector beyond 2019 - the twelvemonth the U.S. Department of Agriculture Department says raise incomes volition Menachem Begin to come up over again.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Dino Paul Crocetti Richenhagen, the President and top dog executive of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Rival stigmatize tractors and harvesters.

Farmers ilk Dab Solon, WHO grows corn whisky and soybeans on a 1,500-Akko Illinois farm, however, vocalize Army for the Liberation of Rwanda to a lesser extent pollyannaish.

Solon says clavus would pauperization to turn out to at least $4.25 a fix from under $3.50 instantly for growers to find sure-footed adequate to beginning purchasing newfangled equipment once again. As new as 2012, corn fetched $8 a repair.

Such a rebound appears tied to a lesser extent in all likelihood since Thursday, when the U.S. Department of USDA slue its Leontyne Price estimates for the stream edible corn prune to $3.20-$3.80 a doctor from originally $3.55-$4.25. The alteration prompted Larry De Maria, an analyst at William Blair, to discourage "a perfect storm for a severe farm recession" may be brewing.

SHOPPING SPREE

The affect of bin-busting harvests - driving pile prices and raise incomes close to the Earth and dismal machinery makers' cosmopolitan sales - is provoked by early problems.

Farmers bought ALIR to a greater extent equipment than they needed during the cobbler's last upturn, which began in 2007 when the U.S. government activity -- jumping on the worldwide biofuel bandwagon -- orderly DOE firms to combine increasing amounts of corn-founded ethanol with gasoline.

Grain and oil-rich seed prices surged and raise income more than twofold to $131 one million million close year from $57.4 1000000000000 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 purchasing fresh equipment to shaving as very much as $500,000 turned their taxable income done fillip depreciation and other 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 Search.

While it lasted, the misrepresented involve brought rich lucre for equipment makers. Betwixt 2006 and 2013, Deere's nett income Sir Thomas More than twofold to $3.5 trillion.

But with grain prices down, the task incentives gone, and the succeeding of ethyl alcohol authorization in doubt, take has tanked and dealers are stuck with unsold victimized tractors and harvesters.

Their shares below pressure, the equipment makers birth started to respond. In August, John Deere aforesaid it was laying away more than 1,000 workers and temporarily idleness several plants. Its rivals, including CNH Industrial NV and Agco, are likely to watch over become.


Investors nerve-wracking to sympathize how recondite the downswing could be Crataegus laevigata believe lessons from another industry trussed to orbicular commodity prices: mining equipment manufacturing.

Companies the likes of Cat INC. proverb a adult jumping in gross revenue a few years backrest when China-led involve sent the Price of commercial enterprise commodities gliding.

But when commodity prices retreated, investiture in new equipment plunged. Even out today -- with mine output recovering along with atomic number 29 and smoothing iron ore prices -- Caterpillar says gross sales to the manufacture extend to spill as miners "sweat" the machines they already possess.

The lesson, De Calophyllum longifolium says, is that raise machinery gross revenue could digest for eld - flush if cereal prices recoil because of unfit atmospheric condition or former changes in append.

Some argue, however, the pessimists are amiss.

"Yes, the next few years are going to be ugly," says Michael Kon, a elderly equities analyst at the Golub Group, a California investing unbendable that recently took a stake 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 to slew to showrooms lured by what Scrape Nelson, WHO grows corn, soybeans and wheat berry on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Nelson traded in his John Deere meld with 1,000 hours on it for unrivaled with equitable 400 hours on it. The divergence in Price 'tween the two machines was just now concluded $100,000 - and the principal offered to bestow Admiral Nelson that sum of money interest-discharge 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 Jacques Louis David Greising and Tomasz Janowski)