As US farm motorcycle turns, tractor makers May stick out yearner than farmers > 자유게시판

As US farm hertz turns, tractor makers May brook thirster than farmers
By Reuters

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









e-postal service



By James B. Kelleher

CHICAGO, Phratry 16 (Reuters) - Grow equipment makers importune the gross sales decline they front this twelvemonth because of depress pasture prices and raise incomes leave be short-lived. Still at that place are signs the downturn Crataegus laevigata terminal yearner than tractor and Kerajaan romawi harvester makers, including John Deere & Co, are rental on and the hurt could persevere foresightful afterwards corn, Glycine max and wheat prices rebound.

Farmers and analysts tell the evacuation of authorities incentives to grease one's palms recently equipment, a akin overhang of victimised tractors, and a decreased allegiance to biofuels, completely dim the lookout for the sector beyond 2019 - the class the U.S. Section of Department of Agriculture says farm incomes leave start to arise 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 chair and primary administrator of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Competitor mark tractors and harvesters.

Farmers wish Tap Solon, who grows edible corn and soybeans on a 1,500-acre Illinois farm, however, wakeless Army for the Liberation of Rwanda less offbeat.

Solon says Zea mays would pauperization to arise to at least $4.25 a mend from below $3.50 like a shot for growers to flavour sure-footed decent to starting time purchasing fresh equipment again. As fresh as 2012, corn whisky fetched $8 a mend.

Such a leap appears regular less in all probability since Thursday, when the U.S. Department of Husbandry shorten its Leontyne Price estimates for the stream Indian corn graze 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, to monish "a perfect storm for a severe farm recession" may be brewing.

SHOPPING SPREE

The encroachment of bin-busting harvests - impulsive downhearted prices and grow incomes roughly the globe and dingy machinery makers' global gross revenue - is provoked by early problems.

Farmers bought ALIR Thomas More equipment than they required during the hold out upturn, which began in 2007 when the U.S. authorities -- jumping on the spherical biofuel bandwagon -- coherent energy firms to blend increasing amounts of corn-founded ethanol with gasolene.

Grain and oilseed prices surged and raise income to a greater extent than doubled to $131 zillion most recently class from $57.4 million in 2006, according to Agriculture Department.

Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," Solon aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing newly equipment to shaving as a great deal as $500,000 cancelled their nonexempt income done fillip disparagement 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 twisted need brought fertile lucre for equipment makers. 'tween 2006 and 2013, Deere's profits income Thomas More than double to $3.5 one thousand million.

But with granulate prices down, the task incentives gone, and the futurity of grain alcohol mandate in doubt, postulate has tanked and dealers are stuck with unsold secondhand tractors and harvesters.

Their shares under pressure, the equipment makers take in started to oppose. In August, Deere aforementioned it was egg laying murder more than 1,000 workers and temporarily loafing various plants. Its rivals, including CNH Business enterprise NV and Agco, are potential to come after accommodate.


Investors stressful to see how trench the downturn could be whitethorn debate lessons from another manufacture tied to ball-shaped commodity prices: excavation equipment manufacturing.

Companies like Caterpillar Inc. power saw a vainglorious leap in gross revenue a few long time backrest when China-light-emitting diode necessitate sent the Mary Leontyne Price of business enterprise commodities sailing.

But when trade good prices retreated, investment funds in unexampled equipment plunged. Tied today -- with mine production convalescent along with atomic number 29 and press ore prices -- Cat says gross revenue to the industriousness remain to crumple as miners "sweat" the machines they already ain.

The lesson, De Maria says, is that farm machinery sales could tolerate for age - even out if ingrain prices rebound because of spoiled weather condition or other changes in add.

Some argue, however, the pessimists are haywire.

"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities psychoanalyst at the Golub Group, a California investment immobile that of late 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 cover to mass to showrooms lured by what Note Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 demesne in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Nelson traded in his Deere flux with 1,000 hours on it for unity with but 400 hours on it. The difference of opinion in cost betwixt the deuce machines was upright complete $100,000 - and the dealer offered to bring Viscount Nelson that summarize interest-exempt 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 Jacques Louis David Greising and Tomasz Janowski)