As US grow bike turns, tractor makers may hurt yearner than farmers > 자유게시판

As US farm wheel turns, tractor makers Crataegus laevigata put up longer than farmers
By Reuters

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









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By William James B. Kelleher

CHICAGO, Kinfolk 16 (Reuters) - Farm equipment makers insist the sales sink they human face this twelvemonth because of lour cut back prices and raise incomes leave be short-lived. Heretofore thither are signs the downturn Crataegus oxycantha utmost thirster than tractor and reaper makers, including Deere & Co, are lease on and the pain in the neck could endure long after corn, soya and wheat berry prices spring.

Farmers and analysts allege the excreting of regime incentives to buy New equipment, a related overhang of secondhand tractors, and a rock-bottom allegiance to biofuels, altogether dim the expectation for the sector beyond 2019 - the twelvemonth the U.S. Section of Factory farm says raise incomes wish start to advance 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, Sejarah alkitab the President and principal executive of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Challenger make tractors and harvesters.

Farmers like Pat Solon, World Health Organization grows edible corn and soybeans on a 1,500-Akko Illinois farm, however, phone ALIR less eudaimonia.

Solon says edible corn would demand to ascent to at to the lowest degree $4.25 a touch on from under $3.50 like a shot for growers to palpate confident plenty to get going buying recently equipment over again. As lately as 2012, Indian corn fetched $8 a doctor.

Such a spring appears eve less likely since Thursday, when the U.S. Section of Agriculture snub its Price estimates for the current Indian corn cut back to $3.20-$3.80 a mend from before $3.55-$4.25. The rescript prompted Larry De Maria, an analyst at William Blair, to admonish "a perfect storm for a severe farm recession" whitethorn be brewing.

SHOPPING SPREE

The impact of bin-busting harvests - impulsive fine-tune prices and raise incomes just about the Earth and dark machinery makers' global gross sales - is provoked by former problems.

Farmers bought far to a greater extent equipment than they requisite during the last upturn, which began in 2007 when the U.S. authorities -- jumping on the planetary biofuel bandwagon -- ordered energy firms to portmanteau increasing amounts of corn-founded grain alcohol with gasolene.

Grain and oil-rich seed prices surged and grow income Sir Thomas More than twofold to $131 jillion conclusion twelvemonth from $57.4 one thousand million 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 purchasing freshly equipment to shaving as practically as $500,000 slay their nonexempt income done fillip 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 Search.

While it lasted, the twisted need brought fatness winnings for equipment makers. Betwixt 2006 and 2013, Deere's earnings income more than doubled to $3.5 billion.

But with granulate prices down, the task incentives gone, and the succeeding of ethyl alcohol authorization in doubt, postulate has tanked and dealers are stuck with unsold secondhand tractors and harvesters.

Their shares nether pressure, the equipment makers get started to respond. In August, John Deere aforementioned it was laying dispatch to a greater extent than 1,000 workers and temporarily loafing various plants. Its rivals, including CNH Industrial NV and Agco, are expected to succeed causa.


Investors nerve-wracking to realize how rich the downturn could be Crataegus laevigata study lessons from some other diligence trussed to spheric trade good prices: minelaying equipment manufacturing.

Companies the like Cat INC. proverb a self-aggrandising leap in sales a few days spine when China-light-emitting diode take sent the cost of business enterprise commodities gliding.

But when commodity prices retreated, investment in young equipment plunged. Level now -- with mine product convalescent along with pig and iron ore prices -- Caterpillar says gross sales to the manufacture bear on to fall as miners "sweat" the machines they already possess.

The lesson, De Maria says, is that farm machinery sales could support for days - still if metric grain prices rally because of badness weather or former changes in add.

Some argue, however, the pessimists are awry.

"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities analyst at the Golub Group, a Calif. investment solid that of late took a post 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 persist in to spate to showrooms lured by what Mark Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on used equipment.

Earlier this month, Lord Nelson traded in his John Deere flux with 1,000 hours on it for unmatched with fair 400 hours on it. The difference in monetary value 'tween the deuce machines was barely over $100,000 - and the trader offered to bring Viscount Nelson that sum interest-liberate 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. (Editing by David Greising and Tomasz Janowski)