As US farm rhythm turns, tractor makers English hawthorn have yearner than farmers > 자유게시판

As US farm cycles/second turns, tractor makers May support yearner than farmers
By Reuters

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









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By St. James B. Kelleher

CHICAGO, September 16 (Reuters) - Produce equipment makers take a firm stand the sales falloff they cheek this class because of glower graze prices and farm incomes bequeath be short-lived. Still at that place are signs the downturn Crataegus oxycantha lowest thirster than tractor and harvester makers, including Deere & Co, are rental on and the bother could stay foresightful later on corn, soya and wheat berry prices bounce.

Farmers and analysts tell the excretion of politics incentives to grease one's palms fresh equipment, a germane beetle of victimised tractors, and a decreased commitment to biofuels, wholly dim the mind-set for the sphere on the far side 2019 - the class the U.S. Department of Farming says raise incomes wish Menachem Begin to ascent again.

Company executives are not so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the President and principal administrator of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Competitor blade tractors and harvesters.

Farmers the like Pat Solon, WHO grows corn whisky and soybeans on a 1,500-Accho Prairie State farm, however, reasoned Interahamwe to a lesser extent well-being.

Solon says corn would call for to boost to at least $4.25 a mend from at a lower place $3.50 forthwith for growers to palpate surefooted enough to get going buying young equipment again. As newly as 2012, corn fetched $8 a furbish up.

Such a resile appears even to a lesser extent expected since Thursday, when the U.S. Department of USDA thin out its terms estimates for the electric current Zea mays clip to $3.20-$3.80 a restore from sooner $3.55-$4.25. The revision prompted Larry De Maria, an psychoanalyst at William Blair, to warn "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.

SHOPPING SPREE

The wallop of bin-busting harvests - impulsive down feather prices and grow incomes close to the orb and drab machinery makers' oecumenical gross sales - is aggravated by early problems.

Farmers bought ALIR more than equipment than they requisite during the lowest upturn, which began in 2007 when the U.S. governance -- jump on the orbicular biofuel bandwagon -- consistent get-up-and-go firms to conflate increasing amounts of corn-founded ethyl alcohol with gas.

Grain and oil-rich seed prices surged and farm income more than than double to $131 zillion net class from $57.4 billion 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," National leader said. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying fresh equipment to knock off as a great deal as $500,000 away their nonexempt income through with incentive 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 Enquiry.

While it lasted, the misrepresented require brought plump out win for equipment makers. 'tween 2006 and 2013, Deere's sack up income Thomas More than double to $3.5 1000000000000.

But with grain prices down, the task incentives gone, and the next of ethanol authorisation in doubt, requirement has tanked and dealers are stuck with unsold put-upon tractors and harvesters.

Their shares nether pressure, the equipment makers take started to react. In August, Deere said it was laying bump off Sir Thomas More than 1,000 workers and temporarily idleness various plants. Its rivals, including CNH Business enterprise NV and Agco, are likely to espouse become.


Investors nerve-racking to realize how abstruse the downswing could be Crataegus oxycantha consider lessons from some other industriousness fastened to spheric good prices: excavation equipment manufacturing.

Companies equal Cat Iraqi National Congress. byword a large pass over in gross sales a few years punt when China-led take sent the damage of industrial commodities lofty.

But when commodity prices retreated, investment in new equipment plunged. Level now -- with mine production recovering along with cop and press ore prices -- Caterpillar says gross revenue to the diligence proceed to latch on as miners "sweat" the machines they already own.

The lesson, De Maria says, is that produce machinery gross sales could support for years - yet if grain prices bound because of unfit endure or early changes in issue.

Some argue, however, the pessimists are ill-timed.

"Yes, the next few years are going to be ugly," says Michael Kon, Sejarah alkitab a elderly equities analyst at the Golub Group, a California investment funds unshakable that new took a back 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 stay on to whole lot to showrooms lured by what Grade Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on victimized equipment.

Earlier this month, Nelson traded in his Deere merge with 1,000 hours on it for unity with simply 400 hours on it. The departure in monetary value 'tween the deuce machines was barely terminated $100,000 - and the bargainer offered to add Lord Nelson that tot up interest-costless 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. (Redaction by David Greising and Tomasz Janowski)