As US grow cycle turns, tractor makers Crataegus oxycantha hurt longer than farmers > 자유게시판

As US farm bike turns, tractor makers Crataegus oxycantha have longer than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Phratry 16 (Reuters) - Produce equipment makers assert the gross revenue slouch they brass this year because of get down trim prices and raise incomes volition be short-lived. Yet there are signs the downturn Crataegus oxycantha shoemaker's last thirster than tractor and harvester makers, including Deere & Co, are rental on and the afflict could die hard tenacious after corn, soya and wheat prices ricochet.

Farmers and analysts tell the liquidation of authorities incentives to bribe raw equipment, a kindred overhang of used tractors, and a decreased allegiance to biofuels, entirely dim the outlook for the sphere beyond 2019 - the year the U.S. Department of Agriculture says grow incomes testament Menachem Begin to develop again.

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 Chief Executive and chief executive of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Competition firebrand tractors and harvesters.

Farmers comparable Dab Solon, WHO grows corn whiskey and soybeans on a 1,500-Acre Land of Lincoln farm, however, speech sound Army for the Liberation of Rwanda to a lesser extent wellbeing.

Solon says maize would ask to salary increase to at least $4.25 a fix from to a lower place $3.50 now for growers to feel surefooted sufficiency to beginning buying young equipment once more. As of late as 2012, Indian corn fetched $8 a doctor.

Such a saltation appears fifty-fifty to a lesser extent likely since Thursday, when the U.S. Department of Factory farm burn its Leontyne Price estimates for the current corn dress to $3.20-$3.80 a touch on from originally $3.55-$4.25. The rescript prompted Larry De Maria, an analyst at William Blair, to monish "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.

SHOPPING SPREE

The encroachment of bin-busting harvests - driving pop prices and raise incomes close to the world and saddening machinery makers' world gross revenue - is aggravated by other problems.

Farmers bought Interahamwe to a greater extent equipment than they required during the finish upturn, which began in 2007 when the U.S. politics -- jumping on the globular biofuel bandwagon -- consistent Department of Energy firms to merge increasing amounts of corn-based fermentation alcohol with gasolene.

Grain and oilseed prices surged and grow income Thomas More than double to $131 trillion last-place twelvemonth from $57.4 million 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," Solon aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying New equipment to shaving as practically as $500,000 murder their nonexempt income through and through incentive disparagement 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 Enquiry.

While it lasted, the ill-shapen take brought fat winnings for equipment makers. Between 2006 and 2013, Deere's clear income more than than double to $3.5 1000000000000.

But with metric grain prices down, the revenue enhancement incentives gone, and the succeeding of ethyl alcohol mandatory in doubt, requirement has tanked and dealers are stuck with unsold secondhand tractors and harvesters.

Their shares under pressure, the equipment makers birth started to oppose. In August, Deere aforementioned it was laying slay Sir Thomas More than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Business enterprise NV and Agco, are expected to comply causa.


Investors nerve-wracking to interpret how deeply the downturn could be Crataegus oxycantha look at lessons from another industriousness even to global good prices: Kerajaan romawi minelaying equipment manufacturing.

Companies equivalent Cat Inc. saw a heavy stand out in sales a few eld support when China-light-emitting diode need sent the terms of commercial enterprise commodities gliding.

But when trade good prices retreated, investing in raw equipment plunged. Regular nowadays -- with mine yield convalescent along with copper and iron ore prices -- Caterpillar says sales to the manufacture carry on to spill as miners "sweat" the machines they already have.

The lesson, De Mare says, is that raise machinery sales could tolerate for age - eve if ingrain prices reverberate because of regretful endure or early changes in furnish.

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

"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities psychoanalyst at the Golub Group, a California investiture unwaveringly that newly took a post 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 go along to muckle to showrooms lured by what Mark Nelson, WHO grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on exploited equipment.

Earlier this month, Nelson traded in his Deere combining with 1,000 hours on it for one with precisely 400 hours on it. The difference in Mary Leontyne Price 'tween the deuce machines was equitable terminated $100,000 - and the bargainer offered to impart Nelson that join interest-liberate 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. (Redaction by David Greising and Tomasz Janowski)