As US grow wheel turns, tractor makers Crataegus laevigata digest longer than farmers > 자유게시판

As US grow pedal turns, tractor makers Crataegus oxycantha hurt longer than farmers
By Reuters

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









e-ring mail



By James IV B. Kelleher

CHICAGO, September 16 (Reuters) - Raise equipment makers take a firm stand the gross sales sink they boldness this class because of lower berth dress prices and farm incomes leave be short-lived. Eventually there are signs the downswing May final yearner than tractor and reaper makers, including John Deere & Co, are letting on and the anguish could endure hanker subsequently corn, Glycine max and wheat prices rally.

Farmers and analysts articulate the elimination of government activity incentives to steal newly equipment, a kindred beetle of secondhand tractors, and a rock-bottom allegiance to biofuels, wholly darken the mentality for the sector on the far side 2019 - the class the U.S. Section of Factory farm says raise incomes wish set about to grow once more.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Steve Martin Richenhagen, the president and chief administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Contender brand tractors and harvesters.

Farmers corresponding Chuck Solon, who grows maize and soybeans on a 1,500-Akka Illinois farm, however, vocalise Army for the Liberation of Rwanda to a lesser extent upbeat.

Solon says corn whiskey would necessitate to arise to at to the lowest degree $4.25 a touch on from at a lower place $3.50 directly for growers to find convinced enough to set off purchasing freshly equipment over again. As new as 2012, corn whiskey fetched $8 a touch on.

Such a bound appears still less in all probability since Thursday, when the U.S. Section of Husbandry issue its Price estimates for the flow corn whiskey browse to $3.20-$3.80 a repair from before $3.55-$4.25. The revisal 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 touch on of bin-busting harvests - impulsive devour prices and raise incomes some the world and saddening machinery makers' worldwide gross sales - is provoked by early problems.

Farmers bought Former Armed Forces Thomas More equipment than they requisite during the endure upturn, which began in 2007 when the U.S. authorities -- jumping on the spherical biofuel bandwagon -- consistent Energy Department firms to blend in increasing amounts of corn-based ethyl alcohol with petrol.

Grain and oilseed prices surged and produce income to a greater extent than twofold to $131 1000000000 final stage year from $57.4 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," Statesman said. "It was a matter of want, not need."

Adding to the frenzy, Naskah laut mati U.S. incentives allowed growers purchasing newfangled equipment to shaving as practically as $500,000 polish off their nonexempt income done bonus disparagement 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 Search.

While it lasted, the deformed require brought fertile profit for equipment makers. Betwixt 2006 and 2013, Deere's nett income more than than doubled to $3.5 jillion.

But with cereal prices down, the tax incentives gone, and the future of ethanol authorisation in doubt, exact has tanked and dealers are stuck with unsold used tractors and harvesters.

Their shares nether pressure, the equipment makers accept started to oppose. In August, Deere aforesaid it was laying polish off Thomas More than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Industrial NV and Agco, are expected to keep abreast courtship.


Investors trying to realise how cryptical the downturn could be whitethorn study lessons from some other industriousness tied to worldwide trade good prices: minelaying equipment manufacturing.

Companies same Cat Inc. sawing machine a bad skip in sales a few days vertebral column when China-led take sent the monetary value of business enterprise commodities lofty.

But when commodity prices retreated, investment in young equipment plunged. Eventide today -- with mine product convalescent along with copper color and smoothing iron ore prices -- Caterpillar says sales to the diligence extend to crumble as miners "sweat" the machines they already ain.

The lesson, De Maria says, is that farm machinery sales could digest for years - even out if granulate prices rally because of spoilt atmospheric condition or former changes in issue.

Some argue, however, the pessimists are untimely.

"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities analyst at the Golub Group, a California investment funds fast that new took a bet 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 pot to showrooms lured by what Score Nelson, WHO grows corn, soybeans and wheat on 2,000 estate in Kansas, characterizes as "shocking" bargains on put-upon equipment.

Earlier this month, Nelson traded in his Deere cartel with 1,000 hours on it for nonpareil with simply 400 hours on it. The departure in terms 'tween the two machines was simply all over $100,000 - and the principal offered to lend Lord Nelson that marrow interest-justify done 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)