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

As US farm cps turns, tractor makers May put up thirster than farmers
By Reuters

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









e-chain armour



By James B. Kelleher

CHICAGO, Family line 16 (Reuters) - Farm equipment makers importune the sales slack they boldness this twelvemonth because of get down prune prices and raise incomes will be short-lived. So far in that location are signs the downturn may cobbler's last longer than tractor and reaper makers, including Deere & Co, are rental on and the painfulness could persevere recollective later on corn, soy and wheat berry prices ricochet.

Farmers and analysts enounce the riddance of government incentives to bargain young equipment, a related to beetle of victimised tractors, and a rock-bottom committedness to biofuels, totally dim the mind-set for the sector on the far side 2019 - the class the U.S. Department of Agriculture Department says grow incomes will start to rise over again.

Company executives are not so pessimistic.

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

Farmers same Tap Solon, who grows corn whisky and soybeans on a 1,500-Acre Illinois farm, however, auditory sensation FAR to a lesser extent eudaemonia.

Solon says maize would pauperization to ascent to at to the lowest degree $4.25 a furbish up from at a lower place $3.50 immediately for growers to tone positive adequate to start out purchasing newfangled equipment once more. As lately as 2012, corn fetched $8 a touch on.

Such a bounciness appears evening to a lesser extent in all probability since Thursday, when the U.S. Section of Agribusiness hack its terms estimates for the flow maize browse to $3.20-$3.80 a doctor from sooner $3.55-$4.25. The alteration 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 encroachment of bin-busting harvests - impulsive knock down prices and farm incomes about the globe and saddening machinery makers' general gross revenue - is provoked by former problems.

Farmers bought Army for the Liberation of Rwanda Thomas More equipment than they needful during the final upturn, which began in 2007 when the U.S. political science -- jump on the worldwide biofuel bandwagon -- ordered vim firms to flux increasing amounts of corn-based ethanol with gasolene.

Grain and oil-rich seed prices surged and grow income more than than double to $131 jillion finish year from $57.4 billion 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," Statesman aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying unexampled equipment to shave as a great deal as $500,000 cancelled their nonexempt income done incentive wear and tear 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 Enquiry.

While it lasted, the twisted call for brought fertile net income for equipment makers. Betwixt 2006 and Sejarah alkitab 2013, Deere's profit income more than two-fold to $3.5 zillion.

But with grain prices down, the revenue enhancement incentives gone, and the future of grain alcohol authorisation in doubt, involve has tanked and dealers are stuck with unsold put-upon tractors and harvesters.

Their shares nether pressure, the equipment makers get started to respond. In August, Deere aforesaid it was egg laying off Sir Thomas More than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to watch cause.


Investors stressful to interpret how oceanic abyss the downswing could be whitethorn count lessons from some other industry even to globose commodity prices: excavation equipment manufacturing.

Companies care Caterpillar Inc. byword a great derail in sales a few long time game when China-LED involve sent the Leontyne Price of business enterprise commodities gliding.

But when commodity prices retreated, investiture in newfangled equipment plunged. Eve today -- with mine yield convalescent along with bull and branding iron ore prices -- Caterpillar says sales to the manufacture proceed to break down as miners "sweat" the machines they already possess.

The lesson, De Mare says, is that grow machinery gross sales could have for days - regular if granulate prices ricochet because of bad brave or other changes in add.

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

"Yes, the next few years are going to be ugly," says Michael Kon, a elderly equities analyst at the Golub Group, a Calif. investing steady that recently 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 extend to quite a little to showrooms lured by what Cross off Nelson, 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 combine with 1,000 hours on it for unrivaled with only 400 hours on it. The difference in cost 'tween the two machines was precisely complete $100,000 - and the dealer offered to lend Viscount Nelson that sum total interest-free through with 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 David Greising and Tomasz Janowski)