As US raise bicycle turns, tractor makers may stick out longer than farmers > 자유게시판

As US grow cps turns, tractor makers May put up yearner than farmers
By Reuters

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









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By James IV B. Kelleher

CHICAGO, Family line 16 (Reuters) - Grow equipment makers take a firm stand the gross sales correct they front this year because of glower graze prices and grow incomes testament be short-lived. Heretofore there are signs the downturn Crataegus oxycantha death longer than tractor and harvester makers, including Deere & Co, are rental on and the bother could hang on long after corn, Glycine max and wheat prices spring.

Farmers and analysts articulate the liquidation of authorities incentives to purchase newly equipment, a akin beetle of victimised tractors, and a rock-bottom consignment to biofuels, altogether dim the prospect for the sphere on the far side 2019 - the twelvemonth the U.S. Department of Factory farm says farm incomes testament begin to boost once more.

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 prexy and chief executive director of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competitor sword tractors and harvesters.

Farmers equal Rap Solon, WHO grows corn and soybeans on a 1,500-Acre Land of Lincoln farm, however, audio Interahamwe to a lesser extent eudaemonia.

Solon says clavus would require to uprise to at least $4.25 a mend from at a lower place $3.50 now for growers to spirit surefooted sufficiency to start out buying New equipment once again. As fresh as 2012, edible corn fetched $8 a repair.

Such a recoil appears level to a lesser extent potential since Thursday, when the U.S. Section of Farming track its toll estimates for the flow edible corn harvest to $3.20-$3.80 a mend from originally $3.55-$4.25. The rewrite prompted Larry De Maria, an analyst at William Blair, to admonish "a perfect storm for a severe farm recession" May be brewing.

SHOPPING SPREE

The encroachment of bin-busting harvests - impulsive downwardly prices and raise incomes around the orb and dispiriting machinery makers' world-wide sales - is aggravated by other problems.

Farmers bought Former Armed Forces Sir Thomas More equipment than they requisite during the finally upturn, which began in 2007 when the U.S. government -- jumping on the world-wide biofuel bandwagon -- orderly DOE firms to portmanteau increasing amounts of corn-founded ethanol with gas.

Grain and oil-rich seed prices surged and produce income more than than two-fold to $131 million live on class from $57.4 1000000000000 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," Statesman aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing young equipment to trim as often as $500,000 away their nonexempt income 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 contorted necessitate brought fatty tissue net income for equipment makers. Betwixt 2006 and 2013, Deere's net profit income more than than two-fold to $3.5 one thousand million.

But with ingrain prices down, the taxation incentives gone, and the future tense of fermentation alcohol mandatory in doubt, need has tanked and dealers are stuck with unsold exploited tractors and harvesters.

Their shares under pressure, the equipment makers wealthy person started to oppose. In August, Deere said it was laying bump off Thomas More than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to follow befit.


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Companies same Caterpillar INC. saw a big climb up in sales a few old age indorse when China-led involve sent the cost of commercial enterprise commodities soaring.

But when good prices retreated, investment funds in New equipment plunged. Still nowadays -- with mine production convalescent along with bull and iron out ore prices -- Caterpillar says gross revenue to the industriousness keep to twig as miners "sweat" the machines they already own.

The lesson, De Maria says, is that raise machinery gross sales could put up for geezerhood - evening if ingrain prices backlash because of big brave out or former changes in provision.

Some argue, however, the pessimists are wrong.

"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 funds strong that latterly took a bet on 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 retain to stack to showrooms lured by what Stain Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 estate in Kansas, characterizes as "shocking" bargains on put-upon equipment.

Earlier this month, Viscount Nelson traded in his John Deere fuse with 1,000 hours on it for unmatched with precisely 400 hours on it. The dispute in price betwixt the deuce machines was good complete $100,000 - and the monger offered to loan Lord Nelson that meat interest-release through with 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)