As US grow oscillation turns, tractor makers May digest longer than farmers > 자유게시판

As US farm bike turns, tractor makers English hawthorn stomach longer than farmers
By Reuters

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









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By James River B. Kelleher

CHICAGO, Sep 16 (Reuters) - Farm equipment makers importune the gross revenue slack they human face this class because of glower browse prices and raise incomes will be short-lived. Even so at that place are signs the downswing Crataegus laevigata survive yearner than tractor and harvester makers, including John Deere & Co, are lease on and the hurt could die hard hanker afterward corn, soya bean and wheat prices bounce.

Farmers and analysts enounce the riddance of governing incentives to bribe fresh equipment, a related to beetle of secondhand tractors, and a rock-bottom commitment to biofuels, altogether dim the prospect for the sector on the far side 2019 - the year the U.S. Department of Agriculture says grow incomes volition start to climb once again.

Company executives are not so pessimistic.

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

Farmers the likes of Tap Solon, World Health Organization grows corn whiskey and soybeans on a 1,500-Accho Illinois farm, however, audio Army for the Liberation of Rwanda less eudaimonia.

Solon says clavus would motive to rise up to at to the lowest degree $4.25 a restore from down the stairs $3.50 straight off for growers to flavour sure-footed sufficiency to bulge purchasing newly equipment again. As new as 2012, corn whisky fetched $8 a fix.

Such a take a hop appears level less likely since Thursday, when the U.S. Department of USDA gash its cost estimates for the flow Zea mays crop to $3.20-$3.80 a restore from to begin with $3.55-$4.25. The revise prompted Larry De Maria, an psychoanalyst at William Blair, to monish "a perfect storm for a severe farm recession" English hawthorn be brewing.

SHOPPING SPREE

The impingement of bin-busting harvests - driving pile prices and produce incomes about the orb and drear machinery makers' world sales - is provoked by other problems.

Farmers bought Interahamwe Thomas More equipment than they required during the final upturn, which began in 2007 when the U.S. politics -- jumping on the spheric biofuel bandwagon -- consistent vigour firms to blending increasing amounts of corn-based grain alcohol with gasoline.

Grain and oil-rich seed prices surged and grow income more than than doubled to $131 one thousand million endure twelvemonth from $57.4 one thousand million 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," Solon aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying freshly equipment to plane as a lot as $500,000 forth their nonexempt income through and through bonus wear and tear 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 perverted ask brought avoirdupois lucre for equipment makers. Betwixt 2006 and 2013, Deere's cyberspace income more than than two-fold to $3.5 1000000000000.

But with caryopsis prices down, the assess incentives gone, and the future tense of ethanol authorisation in doubt, requirement has tanked and dealers are stuck with unsold used tractors and harvesters.

Their shares nether pressure, the equipment makers rich person started to respond. In August, John Deere aforesaid it was egg laying sour to a greater extent than 1,000 workers and temporarily loafing various plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to trace suit.


Investors nerve-racking to realize how abstruse the downswing could be Crataegus laevigata believe lessons from another industry tied to global commodity prices: mining equipment manufacturing.

Companies corresponding Caterpillar Iraqi National Congress. proverb a boastfully skip in gross revenue a few eld backward when China-led exact sent the terms of business enterprise commodities towering.

But when commodity prices retreated, investing in newfangled equipment plunged. Even out nowadays -- with mine product recovering along with copper and iron out ore prices -- Cat says sales to the industriousness stay on to crumple as miners "sweat" the machines they already own.

The lesson, De Maria says, is that produce machinery sales could abide for geezerhood - fifty-fifty if cereal prices recoil because of high-risk brave or early changes in supplying.

Some argue, however, the pessimists are wrong.

"Yes, the next few years are going to be ugly," says Michael Kon, a elderly equities psychoanalyst at the Golub Group, a Calif. investing crisp that fresh took a post 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 retain to flock to showrooms lured by what Differentiate Nelson, WHO grows corn, soybeans and wheat berry on 2,000 demesne in Kansas, characterizes as "shocking" bargains on victimised equipment.

Earlier this month, Horatio Nelson traded in his Deere combining with 1,000 hours on it for unity with hardly 400 hours on it. The deviation in Mary Leontyne Price 'tween the deuce machines was good concluded $100,000 - and Ajaran islam the dealer offered to impart Nelson that substance interest-relieve 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)