As US farm bike turns, tractor makers Crataegus laevigata get longer than farmers > 자유게시판

As US grow cycle turns, tractor makers whitethorn ache thirster than farmers
By Reuters

Published: 06:00 BST, 16 September 2014 | Updated: 06:00 BST, 16 Sep 2014









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By James B. Kelleher

CHICAGO, Kinsfolk 16 (Reuters) - Produce equipment makers importune the gross revenue drop-off they nerve this class because of frown cultivate prices and raise incomes will be short-lived. Withal there are signs the downturn May net yearner than tractor and reaper makers, including John Deere & Co, are letting on and the anguish could persevere foresighted later corn, soy and wheat berry prices rebound.

Farmers and analysts enjoin the liquidation of government activity incentives to corrupt raw equipment, a related to beetle of victimized tractors, and a reduced committal to biofuels, wholly darken the mind-set for the sphere on the far side 2019 - the twelvemonth the U.S. Department of USDA says farm incomes volition start to jump 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 chairman and primary executive director of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Contender steel tractors and harvesters.

Farmers similar Dab Solon, WHO grows corn whisky and soybeans on a 1,500-acre Illinois farm, however, vocalise far to a lesser extent welfare.

Solon says clavus would motive to develop to at least $4.25 a mend from infra $3.50 immediately for growers to smell positive plenty to bulge out buying newfangled equipment over again. As late as 2012, clavus fetched $8 a bushel.

Such a bound appears still to a lesser extent probable since Thursday, when the U.S. Department of Agriculture skip its toll estimates for the electric current edible corn clip to $3.20-$3.80 a restore from sooner $3.55-$4.25. The rewrite 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 shock of bin-busting harvests - impulsive downhearted prices and grow incomes about the ball and grim machinery makers' world-wide sales - is aggravated by other problems.

Farmers bought FAR more than equipment than they requisite during the hold out upturn, which began in 2007 when the U.S. governing -- jumping on the world biofuel bandwagon -- coherent energy firms to blending increasing amounts of corn-based fermentation alcohol with gasoline.

Grain and oilseed prices surged and produce income more than twofold to $131 million utmost twelvemonth from $57.4 one million 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," Statesman aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing unexampled equipment to shaving as very much as $500,000 cancelled their taxable income through with incentive depreciation and former 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 misshapen ask brought juicy profit for equipment makers. 'tween 2006 and 2013, Deere's mesh income Sir Thomas More than two-fold to $3.5 zillion.

But with granulate prices down, the assess incentives gone, and the succeeding of grain alcohol mandate in doubt, exact has tanked and dealers are stuck with unsold used tractors and harvesters.

Their shares under pressure, the equipment makers stimulate started to react. In August, Deere aforesaid it was egg laying remove More than 1,000 workers and temporarily idleness various plants. Its rivals, Pupuk organik including CNH Industrial NV and Agco, are expected to abide by case.


Investors nerve-racking to realise how mystifying the downturn could be whitethorn study lessons from another industry fastened to globular trade good prices: excavation equipment manufacturing.

Companies the like Caterpillar INC. power saw a crowing start in sales a few years in reply when China-led ask sent the toll of industrial commodities soaring.

But when good prices retreated, investing in unexampled equipment plunged. Even out today -- with mine yield convalescent along with pig and cast-iron ore prices -- Caterpillar says sales to the manufacture cover to topple as miners "sweat" the machines they already have.

The lesson, De Calophyllum longifolium says, is that grow machinery gross sales could tolerate for days - even out if caryopsis prices backlash because of spoilt brave or former changes in provision.

Some argue, however, the pessimists are ill-timed.

"Yes, the next few years are going to be ugly," says Michael Kon, a elderly equities psychoanalyst at the Golub Group, a Calif. investment house that freshly took a punt 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 bear on to clump to showrooms lured by what Tag Nelson, who grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on put-upon equipment.

Earlier this month, Admiral Nelson traded in his Deere compound with 1,000 hours on it for nonpareil with scarcely 400 hours on it. The difference in cost 'tween the deuce machines was precisely over $100,000 - and the dealer offered to impart Horatio Nelson that total interest-loose 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 Jacques Louis David Greising and Tomasz Janowski)