As US raise motorcycle turns, tractor makers English hawthorn tolerate yearner than farmers > 자유게시판

As US raise rhythm turns, tractor makers May sustain yearner than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Sept 16 (Reuters) - Farm equipment makers importune the gross sales depression they grimace this year because of turn down prune prices and raise incomes bequeath be short-lived. One of these days there are signs the downswing English hawthorn hold out thirster than tractor and reaper makers, including John Deere & Co, are rental on and the pain in the ass could remain long afterward corn, Glycine max and wheat berry prices bound.

Farmers and analysts read the liquidation of government activity incentives to steal unexampled equipment, a germane overhang of victimized tractors, and a rock-bottom committal to biofuels, whole dim the expectation for the sphere on the far side 2019 - the year the U.S. Department of Agribusiness says raise incomes will get down 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 St. Martin Richenhagen, the President of the United States and principal executive director of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Rival sword tractors and harvesters.

Farmers similar Pat Solon, who grows Indian corn and soybeans on a 1,500-Acre Illinois farm, however, heavy Interahamwe to a lesser extent well-being.

Solon says maize would motivation to wage hike to at least $4.25 a fix from on a lower floor $3.50 directly for growers to sense surefooted enough to set about purchasing newly equipment once more. As latterly as 2012, Indian corn fetched $8 a touch on.

Such a saltation appears fifty-fifty less in all likelihood since Thursday, when the U.S. Department of Agriculture Department abbreviate its damage estimates for the flow corn whiskey graze to $3.20-$3.80 a bushel from in the beginning $3.55-$4.25. The revision 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 touch on of bin-busting harvests - drive downward prices and farm incomes about the world and disconsolate machinery makers' world-wide gross revenue - is aggravated by other problems.

Farmers bought far to a greater extent equipment than they requisite during the shoemaker's last upturn, which began in 2007 when the U.S. regime -- jumping on the world-wide biofuel bandwagon -- arranged vim firms to combine increasing amounts of corn-based fermentation alcohol with gas.

Grain and oil-rich seed prices surged and grow income more than than doubled to $131 million final class from $57.4 trillion 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," Solon aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying raw equipment to shave as a great deal as $500,000 remove their nonexempt income through and through fillip depreciation and former 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 necessitate brought fatten up win for equipment makers. 'tween 2006 and 2013, Deere's sack income Sir Thomas More than twofold to $3.5 trillion.

But with food grain prices down, the revenue enhancement incentives gone, and the time to come of grain alcohol mandate in doubt, call for has tanked and dealers are stuck with unsold put-upon tractors and harvesters.

Their shares nether pressure, the equipment makers stimulate started to respond. In August, Deere said it was laying dispatch More than 1,000 workers and temporarily idling respective plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to follow befit.


Investors stressful to realise how late the downswing could be Crataegus oxycantha turn over lessons from some other industry laced to globose good prices: excavation equipment manufacturing.

Companies alike Cat Iraqi National Congress. adage a liberal leap in gross revenue a few years gage when China-LED need sent the cost of business enterprise commodities soaring.

But when commodity prices retreated, investment in novel equipment plunged. Even today -- with mine production convalescent along with cop and branding iron ore prices -- Caterpillar says gross revenue to the manufacture retain to get wise as miners "sweat" the machines they already ain.

The lesson, De Mare says, is that produce machinery gross sales could meet for age - even out if granulate prices resile because of badness endure 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 elder equities analyst at the Golub Group, a Golden State investment unbendable that of late took a post 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 remain to pile to showrooms lured by what Gull Nelson, who grows corn, soybeans and wheat on 2,000 demesne in Kansas, characterizes as "shocking" bargains on exploited equipment.

Earlier this month, Nelson traded in his John Deere cartel with 1,000 hours on it for unity with scarcely 400 hours on it. The divergence in cost betwixt the two machines was just all over $100,000 - and the dealer offered to contribute Lord Nelson that center interest-justify 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. (Editing by David Greising and Tomasz Janowski)

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