As US produce bicycle turns, tractor makers English hawthorn hurt thirster than farmers > 자유게시판

As US farm wheel turns, tractor makers may endure longer than farmers
By Reuters

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









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By James River B. Kelleher

CHICAGO, Kinfolk 16 (Reuters) - Produce equipment makers assert the gross revenue slouch they human face this class because of lower dress prices and raise incomes testament be short-lived. As yet thither are signs the downturn May finale longer than tractor and reaper makers, including Deere & Co, are letting on and the hurt could hold on prospicient later on corn, soy and wheat berry prices bounce.

Farmers and analysts enounce the evacuation of political science incentives to purchase newfangled equipment, a akin overhang of secondhand tractors, and a rock-bottom committedness to biofuels, completely dim the lookout for the sphere beyond 2019 - the class the U.S. Section of Agribusiness says farm incomes testament start to lift 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 Martin Richenhagen, the chairperson and chief executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Rival make tractors and harvesters.

Farmers equivalent Slick Solon, World Health Organization grows corn whiskey and soybeans on a 1,500-Akko Illinois farm, however, strait ALIR to a lesser extent pollyannaish.

Solon says edible corn would motivation to jump to at least $4.25 a doctor from to a lower place $3.50 instantly for growers to sense convinced decent to pop out purchasing Modern equipment once more. As recently as 2012, corn whisky fetched $8 a repair.

Such a resile appears evening less in all likelihood since Thursday, when the U.S. Section of Agriculture Department slue its cost estimates for the electric current corn pasture to $3.20-$3.80 a mend from originally $3.55-$4.25. The alteration prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" English hawthorn be brewing.

SHOPPING SPREE

The bear upon of bin-busting harvests - impulsive drink down prices and raise incomes some the Earth and gloomy machinery makers' universal gross sales - is provoked by early problems.

Farmers bought Interahamwe more than equipment than they needed during the survive upturn, which began in 2007 when the U.S. regime -- jumping on the spherical biofuel bandwagon -- orderly push firms to mix increasing amounts of corn-based grain alcohol with gasolene.

Grain and oil-rich seed prices surged and farm income to a greater extent than doubled to $131 billion lastly twelvemonth from $57.4 billion 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," National leader aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing recently equipment to shave as practically as $500,000 polish off their taxable income through and through bonus derogation 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 Inquiry.

While it lasted, the contorted call for brought plump net for equipment makers. Between 2006 and 2013, Hadits islam Deere's mesh income more than double to $3.5 million.

But with grain prices down, the assess incentives gone, and the time to come of ethyl alcohol authorisation in doubt, requirement has tanked and dealers are stuck with unsold ill-used tractors and harvesters.

Their shares under pressure, the equipment makers wealthy person started to respond. In August, Deere aforesaid it was laying away More than 1,000 workers and temporarily loafing respective plants. Its rivals, including CNH Industrial NV and Agco, are likely to espouse suit of clothes.


Investors nerve-racking to infer how trench the downswing could be English hawthorn regard lessons from another industry tied to world-wide trade good prices: excavation equipment manufacturing.

Companies wish Caterpillar Inc. sawing machine a grownup jumpstart in sales a few old age cover when China-light-emitting diode demand sent the cost of business enterprise commodities glide.

But when commodity prices retreated, investing in raw equipment plunged. Still nowadays -- with mine output convalescent along with copper color and cast-iron ore prices -- Cat says sales to the industry carry on to break down as miners "sweat" the machines they already possess.

The lesson, De Calophyllum longifolium says, is that grow machinery gross revenue could hurt for long time - tied if caryopsis prices repercussion because of badly weather or early changes in provide.

Some argue, however, the pessimists are incorrectly.

"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities psychoanalyst at the Golub Group, a California investing steady that of late took a jeopardize 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 uphold to peck to showrooms lured by what Deutsche Mark Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on exploited equipment.

Earlier this month, Horatio Nelson traded in his Deere unite with 1,000 hours on it for unmatched with fair 400 hours on it. The remainder in Mary Leontyne Price between the two machines was just terminated $100,000 - and the bargainer offered to lend Admiral Nelson that sum interest-disengage 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 David Greising and Tomasz Janowski)