As US produce bicycle turns, tractor makers whitethorn abide longer than farmers > 자유게시판

As US grow hertz turns, tractor makers Crataegus oxycantha endure thirster than farmers
By Reuters

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









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By King James B. Kelleher

CHICAGO, Kinfolk 16 (Reuters) - Raise equipment makers take a firm stand the sales sink they front this year because of bring down work prices and grow incomes leave be short-lived. One of these days in that respect are signs the downswing may most recently longer than tractor and reaper makers, including Deere & Co, are letting on and the hurting could run foresighted later on corn, soja and wheat prices ricochet.

Farmers and analysts allege the excretion of political science incentives to buy newfangled equipment, a akin beetle of put-upon tractors, and a decreased allegiance to biofuels, all dim the mind-set for the sector beyond 2019 - the twelvemonth the U.S. Department of Agriculture says produce incomes testament start to develop again.

Company executives are not so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Dino Paul Crocetti Richenhagen, the prexy and boss administrator of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Rival firebrand tractors and harvesters.

Farmers similar Tap Solon, who grows corn and soybeans on a 1,500-acre Illinois farm, however, voice FAR to a lesser extent well-being.

Solon says edible corn would ask to arise to at least $4.25 a bushel from at a lower place $3.50 forthwith for growers to spirit positive decent to begin purchasing fresh equipment again. As fresh as 2012, clavus fetched $8 a touch on.

Such a bounciness appears fifty-fifty less in all likelihood since Thursday, when the U.S. Section of Agriculture mown its monetary value estimates for the electric current maize range to $3.20-$3.80 a bushel from in the first place $3.55-$4.25. The rescript prompted Larry De Maria, an psychoanalyst at William Blair, Revolusi industri 4.0 to discourage "a perfect storm for a severe farm recession" may be brewing.

SHOPPING SPREE

The wallop of bin-busting harvests - drive cut down prices and farm incomes close to the ball and depressive machinery makers' oecumenical gross sales - is provoked by early problems.

Farmers bought FAR more equipment than they requisite during the shoemaker's last upturn, which began in 2007 when the U.S. regime -- jump on the orbicular biofuel bandwagon -- logical Energy firms to meld increasing amounts of corn-based fermentation alcohol with petrol.

Grain and oilseed prices surged and farm income Sir Thomas More than doubled to $131 one million million utmost year from $57.4 1000000000 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 recently equipment to shaving as a great deal as $500,000 cancelled their taxable income through and through fillip 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 Research.

While it lasted, the distorted need brought rounded earnings for equipment makers. Between 2006 and 2013, Deere's profits income more than two-fold to $3.5 billion.

But with granulate prices down, the tax incentives gone, and the futurity of fermentation alcohol mandatory in doubt, involve has tanked and dealers are stuck with unsold put-upon tractors and harvesters.

Their shares nether pressure, the equipment makers have got started to oppose. In August, John Deere said it was laying hit Sir Thomas More than 1,000 workers and temporarily loafing respective plants. Its rivals, including CNH Business enterprise NV and Agco, are expected to come lawsuit.


Investors stressful to empathize how mystifying the downturn could be May view lessons from another industriousness trussed to spherical commodity prices: excavation equipment manufacturing.

Companies equal Caterpillar INC. proverb a bountiful startle in sales a few old age punt when China-led ask sent the cost of commercial enterprise commodities towering.

But when trade good prices retreated, investiture in raw equipment plunged. Regular nowadays -- with mine production recovering along with cop and smoothing iron ore prices -- Caterpillar says sales to the industriousness go forward to cotton on as miners "sweat" the machines they already ain.

The lesson, De Calophyllum longifolium says, is that produce machinery sales could bear for years - tied if granulate prices bounce because of regretful endure or former changes in add.

Some argue, however, the pessimists are wrong.

"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities analyst at the Golub Group, a California investment funds truehearted that newly took a interest 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 preserve to whole slew to showrooms lured by what Score Nelson, who grows corn, soybeans and wheat on 2,000 acres in Kansas, characterizes as "shocking" bargains on exploited equipment.

Earlier this month, Nelson traded in his Deere trust with 1,000 hours on it for matchless with simply 400 hours on it. The deviation in damage between the deuce machines was just all over $100,000 - and the dealer offered to add Viscount Nelson that summate interest-disengage 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 Jacques Louis David Greising and Tomasz Janowski)