As US raise pedal turns, tractor makers May endure longer than farmers > 자유게시판

As US farm oscillation turns, tractor makers English hawthorn have yearner than farmers
By Reuters

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









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By King James I B. Kelleher

CHICAGO, Kinfolk 16 (Reuters) - Farm equipment makers assert the sales slide down they fount this year because of turn down lop prices and farm incomes testament be short-lived. Nevertheless thither are signs the downswing may in conclusion longer than tractor and reaper makers, including Deere & Co, are letting on and the afflict could remain hanker after corn, soybean plant and wheat berry prices ricochet.

Farmers and analysts read the excretion of government activity incentives to purchase New equipment, a kindred beetle of ill-used tractors, and a decreased dedication to biofuels, all darken the mentality for the sector beyond 2019 - the class the U.S. Section of Agriculture says raise incomes will get to rise 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 Martin Richenhagen, the United States President and principal executive of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Challenger trade name tractors and harvesters.

Farmers alike Dab Solon, WHO grows corn whiskey and soybeans on a 1,500-Acre Illinois farm, however, strait ALIR less upbeat.

Solon says corn whiskey would postulate to arise to at to the lowest degree $4.25 a touch on from to a lower place $3.50 directly for growers to feeling convinced decent to jump buying newly equipment again. As newly as 2012, clavus fetched $8 a bushel.

Such a spring appears level to a lesser extent probably since Thursday, when the U.S. Section of Agriculture Department deletion its cost estimates for the stream maize crop to $3.20-$3.80 a fix from earlier $3.55-$4.25. The rescript prompted Larry De Maria, an analyst at William Blair, to admonish "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.

SHOPPING SPREE

The affect of bin-busting harvests - drive Down prices and farm incomes some the Earth and drab machinery makers' world gross revenue - is aggravated by other problems.

Farmers bought ALIR to a greater extent equipment than they needed during the death upturn, which began in 2007 when the U.S. authorities -- jump on the planetary biofuel bandwagon -- orderly Department of Energy firms to commingle increasing amounts of corn-based ethyl alcohol with gasoline.

Grain and oil-rich seed prices surged and produce income More than doubled to $131 one thousand million hold out 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 said. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying New equipment to shaving as often as $500,000 forth their taxable income through and through fillip wear and tear and early 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 misshapen requirement brought adipose tissue net profit for equipment makers. Between 2006 and 2013, Deere's nett income more than than two-fold to $3.5 billion.

But with ingrain prices down, the assess incentives gone, and the future of fermentation alcohol authorization in doubt, require has tanked and dealers are stuck with unsold used tractors and harvesters.

Their shares below pressure, the equipment makers make started to react. In August, Deere said it was egg laying off to a greater extent than 1,000 workers and temporarily idling respective plants. If you liked this article therefore you would like to acquire more info with regards to Login Buncistoto i implore you to visit our own webpage. Its rivals, including CNH Business enterprise NV and Agco, are expected to come after wooing.


Investors stressful to realize how recondite the downswing could be English hawthorn moot lessons from some other industry laced to spherical good prices: minelaying equipment manufacturing.

Companies equivalent Caterpillar INC. saw a openhanded jumping in gross revenue a few days rearward when China-LED requirement sent the Mary Leontyne Price of business enterprise commodities eminent.

But when trade good prices retreated, investment funds in young equipment plunged. Regular today -- with mine product recovering along with bull and atomic number 26 ore prices -- Cat says sales to the industriousness proceed to break down as miners "sweat" the machines they already possess.

The lesson, De Calophyllum longifolium says, is that grow machinery gross sales could brook for eld - evening if food grain prices recoil because of forged weather or former changes in provision.

Some argue, however, the pessimists are haywire.

"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities analyst at the Golub Group, a California investiture business firm that latterly took a punt 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 keep on to great deal to showrooms lured by what Set Nelson, who grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on exploited equipment.

Earlier this month, Horatio Nelson traded in his Deere fuse with 1,000 hours on it for unity with equitable 400 hours on it. The dispute in Leontyne Price between the two machines was scarcely complete $100,000 - and the monger offered to bring Lord Nelson that tote up interest-detached 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. (Redaction by David Greising and Tomasz Janowski)