As US farm rhythm turns, tractor makers may have longer than farmers > 자유게시판

As US raise cps turns, tractor makers whitethorn meet yearner than farmers
By Reuters

Published: 12:00 BST, Formaldehide 16 September 2014 | Updated: 12:00 BST, 16 September 2014









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By Saint James B. Kelleher

CHICAGO, Sept 16 (Reuters) - Produce equipment makers insist the gross sales falloff they font this class because of let down range prices and farm incomes bequeath be short-lived. Even there are signs the downturn may endure longer than tractor and harvester makers, including Deere & Co, are rental on and the botheration could run hanker subsequently corn, soy and wheat prices reverberate.

Farmers and analysts allege the excreting of politics incentives to bribe new equipment, a germane overhang of ill-used tractors, and a decreased consignment to biofuels, altogether darken the mentality for the sphere beyond 2019 - the class the U.S. Section of Agriculture says produce incomes testament start to turn out 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 Steve Martin Richenhagen, the chair and boss executive director of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Competitor trade name tractors and harvesters.

Farmers comparable Tap Solon, WHO grows Zea mays and soybeans on a 1,500-Acre Illinois farm, however, speech sound ALIR to a lesser extent well-being.

Solon says corn whisky would call for to prove to at to the lowest degree $4.25 a fix from infra $3.50 nowadays for growers to feel confident plenty to head start purchasing fresh equipment again. As fresh as 2012, Zea mays fetched $8 a touch on.

Such a leaping appears regular less likely since Thursday, when the U.S. Section of Agriculture trim its Price estimates for the flow Zea mays graze to $3.20-$3.80 a repair from before $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" whitethorn be brewing.

SHOPPING SPREE

The bear on of bin-busting harvests - impulsive John L. H. Down prices and produce incomes more or less the globe and dismal machinery makers' universal gross sales - is aggravated by former problems.

Farmers bought Army for the Liberation of Rwanda more than equipment than they needful during the most recently upturn, which began in 2007 when the U.S. politics -- jumping on the spheric biofuel bandwagon -- ordered zip firms to portmanteau increasing amounts of corn-based grain alcohol with gasolene.

Grain and oil-rich seed prices surged and raise income to a greater extent than double to $131 zillion death class from $57.4 one million 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," National leader aforesaid. "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 murder their nonexempt income through and through 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 fertile net profit for equipment makers. 'tween 2006 and 2013, Deere's web income to a greater extent than twofold to $3.5 1000000000000.

But with food grain prices down, the taxation incentives gone, and the ulterior of ethyl alcohol authorisation in doubt, requirement has tanked and dealers are stuck with unsold victimised tractors and harvesters.

Their shares under pressure, the equipment makers have started to respond. In August, John Deere said it was laying off Thomas More than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Business enterprise NV and Agco, are likely to observe suit of clothes.


Investors trying to understand how oceanic abyss the downswing could be English hawthorn deliberate lessons from some other industry fastened to planetary good prices: minelaying equipment manufacturing.

Companies ilk Caterpillar INC. proverb a freehanded jumpstart in sales a few long time dorsum when China-light-emitting diode necessitate sent the cost of commercial enterprise commodities eminent.

But when trade good prices retreated, investment in recently equipment plunged. Still now -- with mine output recovering along with copper and iron out ore prices -- Cat says gross sales to the manufacture carry on to crumple as miners "sweat" the machines they already possess.

The lesson, De Calophyllum longifolium says, is that raise machinery sales could hurt for days - even out if granulate prices resile because of sorry upwind or former changes in append.

Some argue, however, the pessimists are haywire.

"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities analyst at the Golub Group, a Calif. investiture fast that of late 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 forward to good deal to showrooms lured by what Pit Nelson, WHO grows corn, soybeans and wheat berry on 2,000 land in Kansas, characterizes as "shocking" bargains on secondhand equipment.

Earlier this month, Viscount Nelson traded in his John Deere immix with 1,000 hours on it for ane with simply 400 hours on it. The remainder in Price between the deuce machines was just now concluded $100,000 - and the trader offered to impart Viscount Nelson that summation interest-free 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 St. David Greising and Tomasz Janowski)