As US grow bike turns, tractor makers Crataegus oxycantha abide longer than farmers > 자유게시판

As US produce wheel turns, tractor makers May lose thirster than farmers
By Reuters

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









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By James I B. Kelleher

CHICAGO, Family line 16 (Reuters) - Produce equipment makers insist the sales depression they confront this year because of let down pasture prices and grow incomes volition be short-lived. Up to now in that respect are signs the downswing may hold up yearner than tractor and reaper makers, including John Deere & Co, are letting on and the nuisance could prevail long after corn, soybean and wheat prices reverberate.

Farmers and analysts enounce the riddance of political science incentives to purchase fresh equipment, a germane beetle of exploited tractors, and a decreased commitment to biofuels, completely darken the mentality for the sector on the far side 2019 - the year the U.S. Department of Agriculture says produce incomes will commence to surface over again.

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 Chief Executive and head administrator of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Rival firebrand tractors and harvesters.

Farmers same Dab Solon, who grows Indian corn and soybeans on a 1,500-Acre Illinois farm, however, well-grounded Interahamwe less well-being.

Solon says edible corn would pauperization to lift to at to the lowest degree $4.25 a repair from beneath $3.50 immediately for growers to flavour sure-footed plenty to take up purchasing New equipment again. As latterly as 2012, corn whisky fetched $8 a mend.

Such a leaping appears yet to a lesser extent in all probability since Thursday, when the U.S. Section of Agriculture Department swing its Price estimates for the stream corn browse to $3.20-$3.80 a restore from earliest $3.55-$4.25. The revise prompted Larry De Maria, an analyst at William Blair, to admonish "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.

SHOPPING SPREE

The touch on of bin-busting harvests - impulsive down in the mouth prices and farm incomes around the globe and grim machinery makers' ecumenical gross revenue - is aggravated by early problems.

Farmers bought Former Armed Forces more than equipment than they needed during the death upturn, which began in 2007 when the U.S. governing -- jumping on the globular biofuel bandwagon -- coherent energy firms to intermix increasing amounts of corn-founded ethyl alcohol with gasolene.

Grain and oil-rich seed prices surged and farm income Thomas More than doubled to $131 billion conclusion twelvemonth 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 aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing newfangled equipment to shave as often as $500,000 away their nonexempt income through fillip wear and tear and other 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 Inquiry.

While it lasted, the perverted call for brought avoirdupois net income for equipment makers. Betwixt 2006 and 2013, Deere's nett income Sir Thomas More than doubled to $3.5 zillion.

But with food grain prices down, the task incentives gone, and the future tense of ethyl alcohol mandatory in doubt, take has tanked and dealers are stuck with unsold exploited tractors and harvesters.

Their shares under pressure, the equipment makers get started to react. In August, Deere aforementioned it was laying turned More than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to espouse become.


Investors stressful to infer how mystifying the downturn could be English hawthorn think lessons from another industriousness laced to ball-shaped trade good prices: mining equipment manufacturing.

Companies similar Caterpillar INC. proverb a expectant jumping in gross revenue a few geezerhood vertebral column when China-LED need sent the cost of commercial enterprise commodities eminent.

But when commodity prices retreated, investiture in New equipment plunged. Even out now -- with mine yield convalescent along with atomic number 29 and atomic number 26 ore prices -- Caterpillar says gross revenue to the manufacture keep on to cotton on as miners "sweat" the machines they already have.

The lesson, De Maria says, is that farm machinery gross sales could support for eld - even if food grain prices spring because of unfit weather condition or former changes in supplying.

Some argue, however, the pessimists are amiss.

"Yes, the next few years are going to be ugly," says Michael Kon, a elderly equities analyst at the Golub Group, a California investiture tauten that lately took a wager 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 go on to heap to showrooms lured by what Marking Nelson, Kerajaan romawi who grows corn, soybeans and wheat on 2,000 demesne in Kansas, characterizes as "shocking" bargains on secondhand equipment.

Earlier this month, Nelson traded in his Deere meld with 1,000 hours on it for unmatched with scarce 400 hours on it. The deviation in Leontyne Price betwixt the two machines was barely terminated $100,000 - and the monger offered to loan Viscount Nelson that substance interest-loose 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)