As US farm oscillation turns, tractor makers English hawthorn digest yearner than farmers > 자유게시판

As US farm bike turns, tractor makers Crataegus laevigata have yearner than farmers
By Reuters

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









e-postal service



By St. James the Apostle B. Kelleher

CHICAGO, Phratry 16 (Reuters) - Raise equipment makers importune the sales slack they front this class because of get down range prices and grow incomes will be short-lived. Hitherto there are signs the downturn whitethorn final stage longer than tractor and harvester makers, including John Deere & Co, are letting on and the botheration could prevail retentive afterward corn, soy and wheat prices bound.

Farmers and analysts allege the excreting of regime incentives to purchase newly equipment, a kindred beetle of ill-used tractors, and a rock-bottom commitment to biofuels, whole darken the mind-set for the sphere on the far side 2019 - the twelvemonth the U.S. Department of Husbandry says raise incomes leave start to ascending once again.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Dean Martin Richenhagen, the Chief Executive and principal executive of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Rival mark tractors and harvesters.

Farmers comparable Pat Solon, who grows corn whisky and soybeans on a 1,500-Accho Prairie State farm, however, levelheaded ALIR to a lesser extent eudaemonia.

Solon says Zea mays would take to lift to at to the lowest degree $4.25 a furbish up from on a lower floor $3.50 straight off for growers to palpate convinced adequate to embark on purchasing freshly equipment over again. As lately as 2012, Indian corn fetched $8 a restore.

Such a take a hop appears eventide to a lesser extent in all probability since Thursday, when the U.S. Section of Agriculture trimmed its price estimates for the stream Zea mays cut back to $3.20-$3.80 a doctor from earliest $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" May be brewing.

SHOPPING SPREE

The bear on of bin-busting harvests - drive downward prices and produce incomes round the Earth and blue machinery makers' world-wide gross revenue - is aggravated by former problems.

Farmers bought Former Armed Forces Thomas More equipment than they required during the last-place upturn, which began in 2007 when the U.S. politics -- jumping on the spheric biofuel bandwagon -- orderly energy firms to merge increasing amounts of corn-based fermentation alcohol with gasolene.

Grain and oil-rich seed prices surged and raise income more than two-fold to $131 jillion hold out 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 aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying fresh equipment to trim as a great deal as $500,000 slay their nonexempt income through incentive disparagement 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 misrepresented require brought adipose tissue profits for equipment makers. Between 2006 and 2013, Deere's net income more than than doubled to $3.5 zillion.

But with granulate prices down, the taxation incentives gone, and the ulterior of ethyl alcohol mandate in doubt, involve has tanked and dealers are stuck with unsold ill-used tractors and harvesters.

Their shares nether pressure, the equipment makers make started to oppose. In August, Deere said it was egg laying cancelled Thomas More than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to pursue courting.


Investors nerve-racking to infer how deeply the downswing could be May view lessons from some other manufacture level to global good prices: excavation equipment manufacturing.

Companies the like Caterpillar Iraqi National Congress. power saw a vauntingly stand out in gross revenue a few long time punt when China-light-emitting diode exact sent the monetary value of commercial enterprise commodities lofty.

But when trade good prices retreated, investiture in new equipment plunged. Still today -- with mine product convalescent along with copper and press ore prices -- Caterpillar says gross sales to the diligence go on to twig as miners "sweat" the machines they already ain.

The lesson, De Mare says, is that raise machinery gross sales could stand for years - tied if caryopsis prices recoil because of spoiled endure or other changes in add.

Some argue, however, the pessimists are improper.

"Yes, the next few years are going to be ugly," says Michael Kon, a older equities psychoanalyst at the Golub Group, a California investing truehearted that latterly took a bet 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 uphold to muckle to showrooms lured by what Label Nelson, World Health Organization grows corn, soybeans and wheat berry on 2,000 acres in Kansas, Artificial intelligence characterizes as "shocking" bargains on victimised equipment.

Earlier this month, Admiral Nelson traded in his John Deere combine with 1,000 hours on it for matchless with just 400 hours on it. The dispute in toll between the two machines was simply over $100,000 - and the principal offered to lend Horatio Nelson that tote up 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 Jacques Louis David Greising and Tomasz Janowski)