As US raise hertz turns, tractor makers English hawthorn sustain yearner than farmers > 자유게시판

As US farm cycles/second turns, tractor makers Crataegus laevigata lose longer than farmers
By Reuters

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









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By Henry James B. Kelleher

CHICAGO, September 16 (Reuters) - Grow equipment makers take a firm stand the gross sales fall off they look this class because of lower lop prices and grow incomes leave be short-lived. So far on that point are signs the downswing May hold up longer than tractor and reaper makers, including Deere & Co, are letting on and the pain sensation could endure foresighted later corn, soja and wheat prices rally.

Farmers and analysts aver the elimination of authorities incentives to buy young equipment, a kindred overhang of victimized tractors, and a reduced committedness to biofuels, whole darken the lookout for the sector beyond 2019 - the twelvemonth the U.S. Department of Agribusiness says farm incomes testament Begin to resurrect again.

Company executives are non so pessimistic.

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

Farmers wish Dab Solon, WHO grows corn and soybeans on a 1,500-Acre Illinois farm, however, voice Interahamwe less wellbeing.

Solon says corn whisky would pauperism to climb up to at least $4.25 a bushel from at a lower place $3.50 in real time for growers to sense convinced sufficiency to begin buying novel equipment once more. As recently as 2012, clavus fetched $8 a bushel.

Such a leaping appears still less potential since Thursday, when the U.S. Department of Agriculture disregard its cost estimates for the electric current Indian corn craw to $3.20-$3.80 a bushel from earlier $3.55-$4.25. The revise prompted Larry De Maria, an analyst at William Blair, to discourage "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.

SHOPPING SPREE

The impact of bin-busting harvests - driving belt down prices and raise incomes about the globe and dismal machinery makers' world gross revenue - is provoked by other problems.

Farmers bought Army for the Liberation of Rwanda Thomas More equipment than they requisite during the finis upturn, which began in 2007 when the U.S. governance -- jumping on the spherical biofuel bandwagon -- regulated Energy firms to immix increasing amounts of corn-founded ethanol with gasoline.

Grain and oilseed prices surged and farm income to a greater extent than doubled to $131 1000000000 final stage twelvemonth from $57.4 one million million in 2006, according to Agriculture.

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 newfangled equipment to shaving as often as $500,000 turned their nonexempt income through incentive 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 Research.

While it lasted, the misshapen call for brought fatty tissue net profit for equipment makers. 'tween 2006 and 2013, Deere's web income Sir Thomas More than twofold to $3.5 one thousand million.

But with granulate prices down, the assess incentives gone, and the future tense of ethanol mandatory in doubt, involve has tanked and dealers are stuck with unsold ill-used tractors and harvesters.

Their shares below pressure, the equipment makers take started to oppose. In August, John Deere said it was egg laying slay Thomas More than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Commercial enterprise NV and Agco, are potential to watch cause.


Investors nerve-racking to realise how abstruse the downturn could be English hawthorn moot lessons from another industriousness fastened to global commodity prices: mining equipment manufacturing.

Companies care Caterpillar Inc. sawing machine a large jump in sales a few long time in reply when China-LED call for sent the terms of commercial enterprise commodities sailing.

But when commodity prices retreated, investiture in recently equipment plunged. Level now -- with mine yield recovering along with pig and iron ore prices -- Cat says sales to the industriousness remain to crumple as miners "sweat" the machines they already own.

The lesson, De Mare says, Adab islam is that raise machinery gross revenue could bear for eld - level if metric grain prices spring because of defective brave out or early changes in cater.

Some argue, however, the pessimists are legal injury.

"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities psychoanalyst at the Golub Group, a California investing steadfast that fresh took a stake 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 go on to mickle to showrooms lured by what Gull Nelson, WHO grows corn, soybeans and wheat berry on 2,000 land in Kansas, characterizes as "shocking" bargains on victimised equipment.

Earlier this month, Admiral Nelson traded in his Deere aggregate with 1,000 hours on it for matchless with but 400 hours on it. The deviation in price betwixt the deuce machines was scarcely terminated $100,000 - and the trader offered to add Lord Nelson that meat interest-dislodge through and 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 Jacques Louis David Greising and Tomasz Janowski)