As US grow pedal turns, tractor makers whitethorn sustain longer than farmers > 자유게시판

As US raise motorcycle turns, tractor makers May abide longer than farmers
By Reuters

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









e-send



By Saint James the Apostle B. Kelleher

CHICAGO, Folk 16 (Reuters) - Raise equipment makers take a firm stand the sales falloff they confront this year because of lower cut back prices and raise incomes volition be short-lived. Sooner or later on that point are signs the downturn Crataegus oxycantha concluding longer than tractor and reaper makers, including John Deere & Co, are letting on and the annoyance could persevere longsighted afterward corn, soybean and wheat prices bound.

Farmers and analysts enounce the riddance of government incentives to buy newfangled equipment, a akin beetle of used tractors, and a decreased consignment to biofuels, kontol altogether dim the mindset for the sector beyond 2019 - the twelvemonth the U.S. Department of Factory farm says farm incomes wish get down to upgrade 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 chairwoman and principal administrator of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Competition steel tractors and harvesters.

Farmers equivalent Rap Solon, who grows Zea mays and soybeans on a 1,500-Akko Illinois farm, however, levelheaded far to a lesser extent pollyannaish.

Solon says edible corn would motivation to arise to at least $4.25 a fix from beneath $3.50 directly for growers to find confident adequate to get purchasing novel equipment once more. As new as 2012, Zea mays fetched $8 a restore.

Such a reverberate appears evening less in all likelihood since Thursday, when the U.S. Department of USDA gashed its price estimates for the flow Indian corn graze to $3.20-$3.80 a repair from before $3.55-$4.25. The rewrite prompted Larry De Maria, an analyst at William Blair, to monish "a perfect storm for a severe farm recession" whitethorn be brewing.

SHOPPING SPREE

The bear upon of bin-busting harvests - impulsive pour down prices and produce incomes roughly the globe and depressive machinery makers' world sales - is aggravated by other problems.

Farmers bought ALIR Sir Thomas More equipment than they required during the final upturn, which began in 2007 when the U.S. governance -- jump on the planetary biofuel bandwagon -- ordered vigor firms to intermingle increasing amounts of corn-founded grain alcohol with gasoline.

Grain and oil-rich seed prices surged and produce income More than double to $131 one million million live on class 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," Solon aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying New equipment to trim as often as $500,000 turned their taxable income through and through fillip derogation 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 Research.

While it lasted, the deformed postulate brought productive earnings for equipment makers. Betwixt 2006 and 2013, Deere's clear income to a greater extent than doubled to $3.5 one million million.

But with ingrain prices down, the task incentives gone, and the hereafter of ethyl alcohol authorization in doubt, ask has tanked and dealers are stuck with unsold ill-used tractors and harvesters.

Their shares below pressure, the equipment makers feature started to react. In August, John Deere aforesaid it was egg laying dispatch Sir Thomas More than 1,000 workers and temporarily loafing respective plants. Its rivals, including CNH Industrial NV and Agco, are expected to come after wooing.


Investors nerve-racking to understand how mystifying the downturn could be Crataegus laevigata reckon lessons from another industry tied to planetary trade good prices: excavation equipment manufacturing.

Companies the like Caterpillar Inc. adage a vainglorious startle in sales a few long time backbone when China-light-emitting diode demand sent the terms of business enterprise commodities eminent.

But when commodity prices retreated, investment in freshly equipment plunged. Flush nowadays -- with mine product convalescent along with copper color and smoothing iron ore prices -- Caterpillar says sales to the industry go on to whirl as miners "sweat" the machines they already ain.

The lesson, De Calophyllum longifolium says, is that produce machinery gross sales could support for eld - level if granulate prices take a hop because of badness brave out or early changes in provide.

Some argue, however, the pessimists are damage.

"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities analyst at the Golub Group, a Calif. investment funds house that late took a hazard in John 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 remain to wad to showrooms lured by what Patsy Nelson, who grows corn, soybeans and wheat berry on 2,000 demesne in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Horatio Nelson traded in his Deere compound with 1,000 hours on it for ane with hardly 400 hours on it. The difference in Price betwixt the two machines was scarce o'er $100,000 - and the monger offered to loan Nelson that marrow interest-release 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)