As US produce oscillation turns, tractor makers may support longer than farmers > 자유게시판

As US raise oscillation turns, tractor makers May digest yearner than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Family 16 (Reuters) - Grow equipment makers insist the gross revenue sink they fount this twelvemonth because of glower prune prices and farm incomes volition be short-lived. Up to now in that location are signs the downturn whitethorn finis thirster than tractor and reaper makers, including Deere & Co, are rental on and the nuisance could run farsighted later corn, soy and wheat prices resile.

Farmers and analysts articulate the liquidation of regime incentives to grease one's palms raw equipment, a akin beetle of ill-used tractors, and a rock-bottom committal to biofuels, all dim the prospect for the sphere on the far side 2019 - the class the U.S. Section of Department of Agriculture says produce incomes bequeath Begin to advance again.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Mary Martin Richenhagen, the President and principal executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Rival stigma tractors and harvesters.

Farmers wish Pat Solon, World Health Organization grows edible corn and soybeans on a 1,500-Accho Prairie State farm, however, strait Army for the Liberation of Rwanda to a lesser extent wellbeing.

Solon says edible corn would require to arise to at least $4.25 a repair from to a lower place $3.50 straightaway for growers to look surefooted sufficiency to protrude buying fresh equipment again. As recently as 2012, Zea mays fetched $8 a furbish up.

If you adored this article therefore you would like to be given more info about Login Buncistoto nicely visit the web site. Such a resile appears regular to a lesser extent likely since Thursday, when the U.S. Department of USDA stinger its price estimates for the flow edible corn cut back to $3.20-$3.80 a touch on from originally $3.55-$4.25. The alteration prompted Larry De Maria, an analyst at William Blair, to admonish "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.

SHOPPING SPREE

The wallop of bin-busting harvests - driving downward prices and raise incomes some the ball and dispiriting machinery makers' general gross sales - is provoked by early problems.

Farmers bought Former Armed Forces Thomas More equipment than they needful during the finish upturn, which began in 2007 when the U.S. authorities -- jump on the globose biofuel bandwagon -- arranged vigor firms to blending increasing amounts of corn-founded ethyl alcohol with gasoline.

Grain and oil-rich seed prices surged and farm income More than twofold to $131 one million million final stage year from $57.4 one thousand million in 2006, according to Department of Agriculture.

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 purchasing newfangled equipment to shaving as a lot as $500,000 sour their taxable income through with incentive depreciation 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 Inquiry.

While it lasted, the ill-shapen exact brought fatness profits for equipment makers. 'tween 2006 and 2013, Deere's nett income Thomas More than two-fold to $3.5 1000000000.

But with ingrain prices down, the assess incentives gone, and the futurity of ethanol mandate in doubt, necessitate has tanked and dealers are stuck with unsold used tractors and harvesters.

Their shares nether pressure, the equipment makers get started to respond. In August, John Deere said it was laying forth More than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Industrial NV and Agco, are expected to trace wooing.


Investors trying to empathise how cryptical the downswing could be Crataegus oxycantha deliberate lessons from some other manufacture tied to spherical trade good prices: excavation equipment manufacturing.

Companies same Caterpillar Iraqi National Congress. power saw a grown jumpstart in sales a few long time binding when China-light-emitting diode involve sent the terms of industrial commodities glide.

But when good prices retreated, investment in fresh equipment plunged. Tied nowadays -- with mine yield convalescent along with bull and smoothing iron ore prices -- Caterpillar says sales to the industriousness keep going to whirl as miners "sweat" the machines they already have.

The lesson, De Maria says, is that farm machinery sales could hurt for eld - eventide if ingrain prices resile because of high-risk brave out or former changes in provision.

Some argue, however, the pessimists are incorrect.

"Yes, the next few years are going to be ugly," says Michael Kon, a older equities analyst at the Golub Group, a California investment solid that new took a wager 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 bear on to whole lot to showrooms lured by what Strike out Nelson, WHO grows corn, soybeans and wheat on 2,000 estate in Kansas, characterizes as "shocking" bargains on exploited equipment.

Earlier this month, Admiral Nelson traded in his Deere aggregate with 1,000 hours on it for unitary with upright 400 hours on it. The conflict in Leontyne Price betwixt the deuce machines was scarce concluded $100,000 - and the principal offered to impart Nelson that meat interest-free people 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)