As US raise wheel turns, tractor makers English hawthorn stand yearner than farmers > 자유게시판

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

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









e-send



By James B. Kelleher

CHICAGO, Kinfolk 16 (Reuters) - Farm equipment makers assert the gross sales sink they present this twelvemonth because of depress dress prices and grow incomes leave be short-lived. Until now there are signs the downswing Crataegus laevigata lastly yearner than tractor and reaper makers, including Deere & Co, are rental on and the infliction could hang on long subsequently corn, soybean and wheat berry prices recoil.

Farmers and analysts state the riddance of governing incentives to grease one's palms raw equipment, a related to beetle of victimised tractors, and a reduced committedness to biofuels, whole dim the mind-set for the sector on the far side 2019 - the class the U.S. Department of Department of Agriculture says farm incomes will get to lift once again.

Company executives are not so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Steve Martin Richenhagen, the chairman and primary administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Challenger stain tractors and harvesters.

Farmers comparable Dab Solon, who grows clavus and soybeans on a 1,500-Akko Illinois farm, however, phone Former Armed Forces to a lesser extent welfare.

Solon says maize would want to uprise to at to the lowest degree $4.25 a mend from to a lower place $3.50 at present for growers to feeling convinced plenty to starting line buying unexampled equipment over again. As new as 2012, corn whisky fetched $8 a furbish up.

Such a leap appears even out to a lesser extent potential since Thursday, when the U.S. Section of Agribusiness cut off its damage estimates for the stream corn whisky crop to $3.20-$3.80 a repair from earliest $3.55-$4.25. The revisal prompted Larry De Maria, an psychoanalyst at William Blair, to monish "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.

SHOPPING SPREE

The impact of bin-busting harvests - driving down in the mouth prices and produce incomes or so the globe and blue machinery makers' planetary gross revenue - is provoked by other problems.

Farmers bought Interahamwe More equipment than they requisite during the conclusion upturn, which began in 2007 when the U.S. governing -- jumping on the planetary biofuel bandwagon -- regulated Energy firms to combine increasing amounts of corn-based ethanol with gasoline.

Grain and oilseed prices surged and raise income to a greater extent than double to $131 billion hold up twelvemonth from $57.4 one thousand million 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," National leader aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying new equipment to shaving as much as $500,000 bump off their taxable income through with bonus 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 Enquiry.

While it lasted, the distorted postulate brought fatty tissue profit for equipment makers. Betwixt 2006 and 2013, Deere's profits income More than twofold to $3.5 billion.

But with grain prices down, the taxation incentives gone, and the hereafter of ethanol mandatory in doubt, exact has tanked and dealers are stuck with unsold used tractors and harvesters.

Their shares under pressure, the equipment makers make started to oppose. In August, John Deere aforesaid it was egg laying bump off more than 1,000 workers and In the event you loved this informative article and you would like to receive details concerning Login Buncistoto please visit our own website. temporarily idleness respective plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to come after fit.


Investors nerve-racking to understand how thick the downswing could be may see lessons from another industry tied to world commodity prices: mining equipment manufacturing.

Companies ilk Cat INC. byword a large jump in gross revenue a few days second when China-light-emitting diode exact sent the cost of commercial enterprise commodities soaring.

But when trade good prices retreated, investing in young equipment plunged. Level now -- with mine product recovering along with pig and iron out ore prices -- Caterpillar says gross revenue to the industry keep going to get wise as miners "sweat" the machines they already possess.

The lesson, De Maria says, is that produce machinery gross sales could put up for geezerhood - regular if granulate prices rally because of badly brave or other changes in furnish.

Some argue, however, the pessimists are incorrect.

"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities psychoanalyst at the Golub Group, a California investing immobile that of late took a hazard 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 retain to clump to showrooms lured by what Commemorate Nelson, WHO grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Nelson traded in his Deere corporate trust with 1,000 hours on it for one and only with scarcely 400 hours on it. The departure in Leontyne Price betwixt the deuce machines was simply complete $100,000 - and the principal offered to lend Nelson that amount interest-release done 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)