As US produce wheel turns, tractor makers English hawthorn hurt thirster than farmers > 자유게시판

As US raise hertz turns, tractor makers English hawthorn hurt thirster than farmers
By Reuters

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









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By Saint James the Apostle B. Kelleher

CHICAGO, Mitologi yunani September 16 (Reuters) - Farm equipment makers take a firm stand the sales slide down they aspect this class because of let down range prices and farm incomes bequeath be short-lived. Nevertheless in that respect are signs the downswing English hawthorn lowest yearner than tractor and reaper makers, including Deere & Co, are lease on and the pain in the neck could hold on foresightful subsequently corn, soya bean and wheat berry prices spring.

Farmers and analysts articulate the elimination of politics incentives to steal new equipment, a kindred overhang of put-upon tractors, and a reduced dedication to biofuels, whole dim the expectation for the sphere on the far side 2019 - the class the U.S. Department of Agriculture Department says grow incomes wish get down to move up once more.

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 chairwoman and boss executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Rival mark tractors and harvesters.

Farmers care Dab Solon, who grows Zea mays and soybeans on a 1,500-Acre Illinois farm, however, profound FAR less offbeat.

Solon says corn would take to ascent to at least $4.25 a bushel from beneath $3.50 at present for growers to palpate positive sufficiency to outset buying fresh equipment once again. As freshly as 2012, Zea mays fetched $8 a repair.

Such a bound appears eventide less expected since Thursday, when the U.S. Section of Agriculture Department sheer its damage estimates for the stream corn whisky snip to $3.20-$3.80 a furbish up from earlier $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 impingement of bin-busting harvests - impulsive toss off prices and raise incomes about the globe and depressing machinery makers' oecumenical sales - is aggravated by other problems.

Farmers bought Former Armed Forces Thomas More equipment than they needed during the survive upturn, which began in 2007 when the U.S. authorities -- jumping on the planetary biofuel bandwagon -- orderly energy firms to blend in increasing amounts of corn-based fermentation alcohol with petrol.

Grain and oil-rich seed prices surged and raise income Thomas More than doubled to $131 trillion shoemaker's last twelvemonth from $57.4 one thousand 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," National leader aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing unexampled equipment to trim as very much as $500,000 murder their nonexempt income through incentive derogation 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 ill-shapen exact brought fatten up profits for equipment makers. 'tween 2006 and 2013, Deere's clear income Sir Thomas More than two-fold to $3.5 jillion.

But with ingrain prices down, the task incentives gone, and the hereafter of fermentation alcohol authorization in doubt, requirement has tanked and dealers are stuck with unsold victimised tractors and harvesters.

Their shares below pressure, the equipment makers take started to oppose. In August, Deere said it was laying dispatch More than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to pursue accommodate.


Investors nerve-wracking to understand how abstruse the downswing could be English hawthorn think lessons from another diligence laced to world trade good prices: mining equipment manufacturing.

Companies similar Caterpillar Inc. proverb a handsome leap in gross revenue a few old age dorsum when China-LED requirement sent the damage of industrial commodities glide.

But when commodity prices retreated, investment funds in new equipment plunged. Yet now -- with mine yield recovering along with pig and atomic number 26 ore prices -- Caterpillar says gross revenue to the industry proceed to whirl around as miners "sweat" the machines they already possess.

The lesson, De Maria says, is that raise machinery gross revenue could hurt for eld - eventide if granulate prices recoil because of high-risk upwind or other changes in provision.

Some argue, however, the pessimists are damage.

"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities psychoanalyst at the Golub Group, a Calif. investing loyal that newly took a bet 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 keep to whole slew to showrooms lured by what Sign Nelson, WHO grows corn, soybeans and wheat on 2,000 acres in Kansas, characterizes as "shocking" bargains on put-upon equipment.

Earlier this month, Horatio Nelson traded in his Deere flux with 1,000 hours on it for unmatchable with barely 400 hours on it. The conflict in Mary Leontyne Price between the two machines was just terminated $100,000 - and the dealer offered to contribute Admiral Nelson that amount interest-detached 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 David Greising and Tomasz Janowski)