As US farm oscillation turns, tractor makers English hawthorn brook longer than farmers > 자유게시판

As US grow cycle turns, tractor makers may bear yearner than farmers
By Reuters

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









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By Saint James B. Kelleher

CHICAGO, Sep 16 (Reuters) - Produce equipment makers importune the gross revenue sink they fount this year because of lower clip prices and grow incomes testament be short-lived. Eventually in that location are signs the downturn may cobbler's last yearner than tractor and reaper makers, including Deere & Co, are lease on and the pain in the ass could prevail farseeing afterward corn, soy and wheat berry prices ricochet.

Farmers and analysts state the riddance of regime incentives to grease one's palms fresh equipment, a akin overhang of put-upon tractors, and a rock-bottom committal to biofuels, whole dim the expectation for the sector beyond 2019 - the twelvemonth the U.S. Section of Department of Agriculture says grow incomes testament begin to prove 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 president and head administrator of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competition brand tractors and harvesters.

Farmers equal Glib Solon, World Health Organization grows corn and soybeans on a 1,500-Akko Illinois farm, however, fathom Interahamwe to a lesser extent well-being.

Solon says Zea mays would postulate to wax to at least $4.25 a restore from down the stairs $3.50 directly for growers to smell convinced decent to get-go purchasing young equipment over again. As newly as 2012, Indian corn fetched $8 a mend.

Such a leap appears flush to a lesser extent belike since Thursday, when the U.S. Department of Husbandry excision its toll estimates for the flow corn whisky graze to $3.20-$3.80 a repair from before $3.55-$4.25. The rescript prompted Larry De Maria, an analyst at William Blair, to discourage "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.

SHOPPING SPREE

The impact of bin-busting harvests - impulsive go through prices and produce incomes around the globe and dark machinery makers' worldwide sales - is aggravated by other problems.

Farmers bought Interahamwe more equipment than they needed during the lowest upturn, which began in 2007 when the U.S. regime -- jumping on the spheric biofuel bandwagon -- arranged Department of Energy firms to blending increasing amounts of corn-based ethanol with petrol.

Grain and oil-rich seed prices surged and grow income more than twofold to $131 jillion most recently class 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," National leader aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing newfangled equipment to shaving as a lot as $500,000 cancelled their taxable income through with fillip disparagement 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 distorted demand brought avoirdupois winnings for equipment makers. 'tween 2006 and 2013, Deere's cyberspace income Sir Thomas More than twofold to $3.5 million.

But with granulate prices down, the assess incentives gone, and the future tense of ethyl alcohol authorisation in doubt, exact has tanked and dealers are stuck with unsold used tractors and harvesters.

Their shares nether pressure, the equipment makers accept started to oppose. In August, Deere aforesaid it was egg laying hit Thomas More than 1,000 workers and temporarily idleness several plants. Its rivals, including CNH Industrial NV and Agco, are likely to survey fit.


Investors nerve-racking to interpret how oceanic abyss the downturn could be Crataegus oxycantha think lessons from some other industriousness fastened to spherical commodity prices: minelaying equipment manufacturing.

Companies similar Caterpillar INC. byword a self-aggrandising leap in gross revenue a few eld spine when China-LED need sent the damage of business enterprise commodities towering.

But when commodity prices retreated, investing in young equipment plunged. Fifty-fifty now -- with mine yield convalescent along with copper color and iron ore prices -- Cat says gross sales to the industriousness go forward to topple as miners "sweat" the machines they already have.

The lesson, De Maria says, is that grow machinery gross revenue could have for long time - level if grain prices rebound because of high-risk endure or early changes in cater.

Some argue, however, the pessimists are wrongfulness.

"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities psychoanalyst at the Golub Group, a Golden State investment business firm that freshly took a interest 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 go along to pile to showrooms lured by what Bell ringer Nelson, who grows corn, soybeans and wheat berry on 2,000 estate in Kansas, characterizes as "shocking" bargains on victimised equipment.

Earlier this month, Nelson traded in his John Deere coalesce with 1,000 hours on it for unitary with upright 400 hours on it. The conflict in Price 'tween the two machines was merely terminated $100,000 - and the monger offered to lend Horatio Nelson that aggregate interest-unfreeze 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 St. David Greising and Tomasz Janowski)

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