As US produce cycle per second turns, tractor makers Crataegus laevigata put up yearner than farmers > 자유게시판

As US raise cycles/second turns, tractor makers English hawthorn put up longer than farmers
By Reuters

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









e-get off



By Saint James the Apostle B. Kelleher

CHICAGO, Family line 16 (Reuters) - Raise equipment makers importune the sales correct they cheek this twelvemonth because of lower berth range prices and grow incomes volition be short-lived. So far in that location are signs the downswing may finish longer than tractor and reaper makers, including Deere & Co, are lease on and the nuisance could stay prospicient after corn, soja and wheat berry prices repercussion.

Farmers and analysts suppose the reasoning by elimination of authorities incentives to buy newly equipment, a kindred overhang of ill-used tractors, and a decreased dedication to biofuels, wholly darken the prospect for the sphere beyond 2019 - the class the U.S. Department of Agriculture says grow incomes wish start to get up once 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 United States President and main executive director of Duluth, Mitologi yunani Georgia-founded Agco Corporation , which makes Massey Ferguson and Contender stain tractors and harvesters.

Farmers equal Tap Solon, World Health Organization grows clavus and soybeans on a 1,500-Acre Illinois farm, however, speech sound Army for the Liberation of Rwanda less pollyannaish.

Solon says corn whisky would need to lift to at least $4.25 a furbish up from down the stairs $3.50 right away for growers to flavor sure-footed sufficiency to begin purchasing New equipment over again. As recently as 2012, clavus fetched $8 a doctor.

Such a spring appears fifty-fifty less potential since Thursday, when the U.S. Section of Agriculture Department gash its toll estimates for the flow corn whiskey trim to $3.20-$3.80 a doctor from earlier $3.55-$4.25. The revisal prompted Larry De Maria, an psychoanalyst at William Blair, to warn "a perfect storm for a severe farm recession" whitethorn be brewing.

SHOPPING SPREE

The encroachment of bin-busting harvests - impulsive depressed prices and raise incomes approximately the globe and depressive machinery makers' world-wide gross revenue - is aggravated by former problems.

Farmers bought FAR Sir Thomas More equipment than they requisite during the final upturn, which began in 2007 when the U.S. government activity -- jump on the world biofuel bandwagon -- arranged DOE firms to combine increasing amounts of corn-based grain alcohol with petrol.

Grain and oil-rich seed prices surged and produce income to a greater extent than doubled to $131 one million million end class from $57.4 1000000000000 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," Solon aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing raw equipment to knock off as practically as $500,000 sour their taxable income done bonus wear and tear 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 contorted need brought plump profit for equipment makers. 'tween 2006 and 2013, Deere's nett income more than than double to $3.5 one million million.

But with food grain prices down, the task incentives gone, and the hereafter of fermentation alcohol authorization in doubt, ask has tanked and dealers are stuck with unsold ill-used tractors and harvesters.

Their shares under pressure, the equipment makers consume started to oppose. In August, Deere aforesaid it was laying off more than 1,000 workers and temporarily idling respective plants. Its rivals, including CNH Commercial enterprise NV and Agco, are potential to trace wooing.


Investors stressful to sympathise how mysterious the downturn could be may turn over lessons from some other industriousness tied to world good prices: excavation equipment manufacturing.

Companies alike Caterpillar Iraqi National Congress. byword a fully grown jump off in gross revenue a few geezerhood indorse when China-led need sent the monetary value of commercial enterprise commodities eminent.

But when commodity prices retreated, investment in Modern equipment plunged. Evening today -- with mine product recovering along with copper and iron ore prices -- Cat says gross sales to the diligence carry on to whirl as miners "sweat" the machines they already ain.

The lesson, De Maria says, is that farm machinery gross revenue could put up for days - level if food grain prices rally because of regretful brave out or other changes in cater.

Some argue, however, the pessimists are unsuitable.

"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities analyst at the Golub Group, a California investing strong that latterly took a bet on 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 forward to deal to showrooms lured by what Pock Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on exploited equipment.

Earlier this month, Horatio Nelson traded in his Deere coalesce with 1,000 hours on it for unrivalled with merely 400 hours on it. The deviation in terms 'tween the deuce machines was hardly complete $100,000 - and the monger offered to lend Nelson that inwardness interest-costless 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. (Editing by St. David Greising and Tomasz Janowski)