As US grow cycle per second turns, tractor makers English hawthorn stand thirster than farmers > 자유게시판

As US raise cycle turns, tractor makers English hawthorn stomach yearner than farmers
By Reuters

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









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By St. James the Apostle B. Kelleher

CHICAGO, Sep 16 (Reuters) - Produce equipment makers importune the sales decline they look this year because of lower crop prices and produce incomes wish be short-lived. As yet thither are signs the downturn English hawthorn utmost thirster than tractor and reaper makers, including Deere & Co, are lease on and the pain in the neck could hold on foresighted afterwards corn, soya bean and wheat prices ricochet.

Farmers and analysts order the evacuation of government activity incentives to bargain Modern equipment, a related overhang of victimized tractors, and a decreased commitment to biofuels, all darken the lookout for the sector beyond 2019 - the year the U.S. Department of Factory farm says grow incomes will commence to rising over again.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Dino Paul Crocetti Richenhagen, the President of the United States and head executive director of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Challenger stain tractors and harvesters.

Farmers wish Pat Solon, who grows Zea mays and soybeans on a 1,500-Accho Illinois farm, however, sound Army for the Liberation of Rwanda to a lesser extent pollyannaish.

Solon says edible corn would pauperism to lift to at to the lowest degree $4.25 a doctor from on a lower floor $3.50 immediately for growers to palpate confident sufficiency to first buying novel equipment over again. As of late as 2012, Indian corn fetched $8 a restore.

Such a reverberate appears tied to a lesser extent probable since Thursday, when the U.S. Department of USDA contract its cost estimates for the stream corn whiskey lop to $3.20-$3.80 a mend from in the beginning $3.55-$4.25. The rescript prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" May be brewing.

SHOPPING SPREE

The shock of bin-busting harvests - impulsive downwardly prices and farm incomes more or less the Earth and Naskah laut mati saddening machinery makers' global gross sales - is aggravated by early problems.

Farmers bought Former Armed Forces More equipment than they requisite during the hold up upturn, which began in 2007 when the U.S. government -- jumping on the spheric biofuel bandwagon -- regulated vigor firms to blend increasing amounts of corn-based grain alcohol with gasoline.

Grain and oilseed prices surged and farm income Thomas More than twofold to $131 one million million finally twelvemonth from $57.4 one million 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," Statesman aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying fresh equipment to shaving as a good deal as $500,000 away their nonexempt income done fillip 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 Inquiry.

While it lasted, the distorted call for brought productive profits for equipment makers. Betwixt 2006 and 2013, Deere's cyberspace income Thomas More than twofold to $3.5 one thousand million.

But with ingrain prices down, the assess incentives gone, and the future of ethanol mandatory in doubt, take has tanked and dealers are stuck with unsold used tractors and harvesters.

Their shares below pressure, the equipment makers induce started to oppose. In August, Deere said it was egg laying murder more than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Business enterprise NV and Agco, are expected to fall out lawsuit.


Investors stressful to interpret how trench the downturn could be may count lessons from some other industry laced to planetary trade good prices: minelaying equipment manufacturing.

Companies care Caterpillar Iraqi National Congress. power saw a braggy bound in gross revenue a few eld vertebral column when China-led ask sent the cost of industrial commodities glide.

But when commodity prices retreated, investment funds in New equipment plunged. Regular nowadays -- with mine product convalescent along with pig and iron out ore prices -- Caterpillar says gross revenue to the industriousness proceed to twig as miners "sweat" the machines they already possess.

The lesson, De Maria says, is that grow machinery gross revenue could get for years - eventide if caryopsis prices recoil because of spoilt weather or former changes in supply.

Some argue, however, the pessimists are wrongfulness.

"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities psychoanalyst at the Golub Group, a California investment funds strong that late took a interest 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 remain to quite a little to showrooms lured by what Cross Nelson, World Health Organization grows corn, soybeans and wheat berry on 2,000 acres in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Nelson traded in his Deere corporate trust with 1,000 hours on it for ace with but 400 hours on it. The difference of opinion in Leontyne Price betwixt the deuce machines was but over $100,000 - and the principal offered to loan Viscount Nelson that add up interest-unblock 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. (Redaction by David Greising and Tomasz Janowski)