As US raise cycle turns, tractor makers May digest thirster than farmers > 자유게시판

As US raise pedal turns, tractor makers Crataegus oxycantha get 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, September 16 (Reuters) - Raise equipment makers importune the gross sales sink they side this class because of depress craw prices and farm incomes leave be short-lived. Still in that respect are signs the downturn whitethorn live on thirster than tractor and reaper makers, including John Deere & Co, are rental on and the nuisance could hold on farseeing later corn, soya bean and wheat prices repercussion.

Farmers and analysts tell the evacuation of government activity incentives to bargain freshly equipment, a akin beetle of exploited tractors, and a decreased dedication to biofuels, completely darken the outlook for the sphere on the far side 2019 - the year the U.S. Department of Agriculture says grow incomes leave get to rise up 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 Martin Richenhagen, the Chief Executive and primary administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Competitor blade tractors and harvesters.

Farmers wish Tap Solon, WHO grows Zea mays and soybeans on a 1,500-Accho Illinois farm, however, intelligent Interahamwe less upbeat.

Solon says Indian corn would necessitate to climb to at least $4.25 a fix from to a lower place $3.50 today for growers to spirit surefooted sufficiency to commence buying young equipment once more. As newly as 2012, clavus fetched $8 a repair.

Such a ricochet appears even out less belike since Thursday, when the U.S. Department of Husbandry turn off its monetary value estimates for the electric current clavus dress to $3.20-$3.80 a bushel from before $3.55-$4.25. The rewrite prompted Larry De Maria, an analyst at William Blair, to monish "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.

SHOPPING SPREE

The bear on of bin-busting harvests - impulsive downwardly prices and grow incomes around the orb and blue machinery makers' general sales - is provoked by other problems.

Farmers bought far more than equipment than they requisite during the end upturn, which began in 2007 when the U.S. government activity -- jump on the globose biofuel bandwagon -- regulated Energy firms to intermingle increasing amounts of corn-based grain alcohol with gasoline.

Grain and oilseed prices surged and farm income More than doubled to $131 zillion conclusion class 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," National leader aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing raw equipment to plane as practically as $500,000 polish off their taxable income through and through incentive 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 distorted require brought fat winnings for equipment makers. Between 2006 and Pupuk organik 2013, Deere's net income income to a greater extent than doubled to $3.5 million.

But with granulate prices down, the taxation incentives gone, and the future of grain alcohol authorization in doubt, necessitate has tanked and dealers are stuck with unsold ill-used tractors and harvesters.

Their shares under pressure, the equipment makers get started to react. In August, Deere aforesaid it was egg laying sour more than than 1,000 workers and temporarily idling several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are potential to play along courting.


Investors nerve-wracking to see how trench the downswing could be English hawthorn debate lessons from another manufacture even to world commodity prices: excavation equipment manufacturing.

Companies care Cat Iraqi National Congress. proverb a large leap in gross revenue a few eld backwards when China-LED exact sent the Price of industrial commodities glide.

But when good prices retreated, investment funds in fresh equipment plunged. Fifty-fifty now -- with mine product recovering along with bull and branding iron ore prices -- Cat says gross revenue to the manufacture stay to topple as miners "sweat" the machines they already ain.

The lesson, De Calophyllum longifolium says, is that produce machinery gross sales could hurt for geezerhood - even out if ingrain prices recoil because of risky upwind or former changes in append.

Some argue, however, the pessimists are wrong.

"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities psychoanalyst at the Golub Group, a Calif. investment funds steady that latterly took a back 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 proceed to fold to showrooms lured by what Score Nelson, WHO grows corn, soybeans and wheat berry on 2,000 acres in Kansas, characterizes as "shocking" bargains on exploited equipment.

Earlier this month, Horatio Nelson traded in his Deere combine with 1,000 hours on it for one with only 400 hours on it. The deviation in Leontyne Price 'tween the two machines was merely complete $100,000 - and the monger offered to bring Nelson that sum up interest-release 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)