As US raise wheel turns, tractor makers May brook longer than farmers > 자유게시판

As US grow bike turns, tractor makers whitethorn get longer than farmers
By Reuters

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









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By William James B. Kelleher

CHICAGO, Kinsfolk 16 (Reuters) - Produce equipment makers importune the sales slide down they face this class because of turn down crop prices and produce incomes wish be short-lived. Nevertheless thither are signs the downturn may live on thirster than tractor and reaper makers, including Deere & Co, are rental on and the painful sensation could endure prospicient after corn, soya bean and wheat prices recoil.

Farmers and analysts tell the excretion of governing incentives to grease one's palms freshly equipment, a related overhang of ill-used tractors, and a decreased dedication to biofuels, entirely dim the mentality for the sector beyond 2019 - the year the U.S. Section of Factory farm says farm incomes wish lead off to rise up 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 Steve Martin Richenhagen, the prexy and primary administrator of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Rival firebrand tractors and harvesters.

Farmers similar Tap Solon, WHO grows corn whiskey and soybeans on a 1,500-Accho Illinois farm, however, reasoned Former Armed Forces to a lesser extent upbeat.

Solon says corn whisky would postulate to hike to at least $4.25 a mend from downstairs $3.50 today for growers to feel positive plenty to commencement purchasing newfangled equipment once again. As newly as 2012, corn whisky fetched $8 a furbish up.

Such a leaping appears even out less potential since Thursday, when the U.S. Department of Farming cut back its monetary value estimates for the current Zea mays dress to $3.20-$3.80 a doctor from earliest $3.55-$4.25. The rescript prompted Larry De Maria, an analyst at William Blair, to discourage "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.

SHOPPING SPREE

The affect of bin-busting harvests - impulsive shoot down prices and farm incomes more or less the world and dingy machinery makers' cosmopolitan gross revenue - is aggravated by other problems.

Farmers bought FAR to a greater extent equipment than they requisite during the in conclusion upturn, which began in 2007 when the U.S. governing -- jump on the planetary biofuel bandwagon -- ordered get-up-and-go firms to portmanteau word increasing amounts of corn-based ethanol with petrol.

Grain and oil-rich seed prices surged and grow income More than twofold to $131 jillion survive year from $57.4 one thousand million in 2006, Wajah yesus according to Agriculture.

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

Adding to the frenzy, U.S. incentives allowed growers purchasing fresh equipment to shave as very much as $500,000 dispatch their taxable income done 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 Enquiry.

While it lasted, the malformed exact brought fatty tissue net income for equipment makers. Betwixt 2006 and 2013, Deere's meshwork income more than than doubled to $3.5 jillion.

But with ingrain prices down, the taxation incentives gone, and the futurity of fermentation alcohol mandatory in doubt, exact has tanked and dealers are stuck with unsold used tractors and harvesters.

Their shares below pressure, the equipment makers make started to oppose. In August, Deere aforesaid it was egg laying remove Sir Thomas More than 1,000 workers and temporarily loafing respective plants. Its rivals, including CNH Industrial NV and Agco, are expected to watch over suit.


Investors trying to sympathize how rich the downturn could be whitethorn conceive lessons from another manufacture fastened to world-wide good prices: excavation equipment manufacturing.

Companies similar Caterpillar INC. saw a prominent skip over in gross revenue a few age second when China-led involve sent the price of business enterprise commodities sailing.

But when commodity prices retreated, investiture in freshly equipment plunged. Evening now -- with mine production convalescent along with atomic number 29 and branding iron ore prices -- Caterpillar says gross sales to the manufacture uphold to get onto as miners "sweat" the machines they already possess.

The lesson, De Maria says, is that produce machinery gross revenue could ache for days - fifty-fifty if food grain prices recoil because of regretful atmospheric condition or former changes in furnish.

Some argue, however, the pessimists are wrongfulness.

"Yes, the next few years are going to be ugly," says Michael Kon, a elderly equities psychoanalyst at the Golub Group, a Calif. investment funds firmly that newly took a bet 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 go on to peck to showrooms lured by what Crisscross Nelson, WHO grows corn, soybeans and wheat berry on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Viscount Nelson traded in his Deere merge with 1,000 hours on it for matchless with but 400 hours on it. The deviation in Leontyne Price between the deuce machines was hardly terminated $100,000 - and the principal offered to lend Viscount Nelson that essence interest-detached 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 Saint David Greising and Tomasz Janowski)