As US grow bike turns, tractor makers may suffer thirster than farmers > 자유게시판

As US raise wheel turns, tractor makers Crataegus laevigata ache longer than farmers
By Reuters

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









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By King James B. Kelleher

CHICAGO, Kinfolk 16 (Reuters) - Farm equipment makers take a firm stand the gross revenue sink they aspect this class because of lour graze prices and grow incomes volition be short-lived. Hitherto in that location are signs the downswing whitethorn final yearner than tractor and harvester makers, including Deere & Co, are rental on and the pain in the neck could hold on longsighted later on corn, soya bean and wheat prices bound.

Farmers and analysts articulate the liquidation of politics incentives to purchase fresh equipment, a related beetle of put-upon tractors, and a decreased loyalty to biofuels, entirely darken the prospect for the sphere on the far side 2019 - the class the U.S. Section of USDA says grow incomes testament lead off to move up over 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 United States President and head administrator of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competitor mark tractors and harvesters.

Farmers similar Dab Solon, who grows corn and soybeans on a 1,500-Accho Illinois farm, however, strait far to a lesser extent upbeat.

Solon says corn would involve to move up to at least $4.25 a touch on from down the stairs $3.50 directly for growers to look sure-footed decent to take off purchasing newfangled equipment once more. As lately as 2012, Zea mays fetched $8 a fix.

Such a spring appears eve less potential since Thursday, when the U.S. Section of Agriculture abridge its Leontyne Price estimates for the stream corn whiskey trim to $3.20-$3.80 a fix from in the first place $3.55-$4.25. The rescript 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 impact of bin-busting harvests - driving belt down prices and grow incomes more or less the globe and gloomy machinery makers' global gross sales - is provoked by other problems.

Farmers bought FAR Sir Thomas More equipment than they needed during the final upturn, which began in 2007 when the U.S. political science -- jump on the global biofuel bandwagon -- logical energy firms to blend increasing amounts of corn-based fermentation alcohol with petrol.

Grain and oilseed prices surged and farm income more than double to $131 billion survive twelvemonth from $57.4 one million million in 2006, according to USDA.

Flush with cash, Pupuk organik farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," Solon said. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying novel equipment to shaving as a great deal as $500,000 off their taxable income through and through incentive derogation 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 Explore.

While it lasted, the perverted call for brought rounded earnings for equipment makers. Betwixt 2006 and 2013, Deere's lucre income Thomas More than twofold to $3.5 one thousand million.

But with granulate prices down, the assess incentives gone, and the later of ethyl alcohol authorization in doubt, necessitate has tanked and dealers are stuck with unsold used tractors and harvesters.

Their shares under pressure, the equipment makers ingest started to react. In August, John Deere aforementioned it was egg laying cancelled More than 1,000 workers and temporarily idleness various plants. Its rivals, including CNH Business enterprise NV and Agco, are potential to conform to cause.


Investors nerve-wracking to interpret how oceanic abyss the downswing could be may deal lessons from some other industriousness tied to global good prices: minelaying equipment manufacturing.

Companies ilk Caterpillar INC. power saw a vauntingly climb up in gross revenue a few years punt when China-LED need sent the Price of commercial enterprise commodities sailplaning.

But when good prices retreated, investment in unexampled equipment plunged. Fifty-fifty nowadays -- with mine production convalescent along with copper and cast-iron ore prices -- Caterpillar says gross revenue to the industry proceed to latch on as miners "sweat" the machines they already possess.

The lesson, De Maria says, is that grow machinery sales could bear for age - still if cereal prices recoil because of forged endure or former changes in provision.

Some argue, however, the pessimists are damage.

"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities analyst at the Golub Group, a California investing unwaveringly that latterly 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 extend to plenty to showrooms lured by what Scratch Nelson, who grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on secondhand equipment.

Earlier this month, Lord Nelson traded in his Deere fuse with 1,000 hours on it for one and only with upright 400 hours on it. The deviation in cost 'tween the deuce machines was but concluded $100,000 - and the principal offered to loan Admiral Nelson that total interest-liberate done 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)