As US grow pedal turns, tractor makers may ache thirster than farmers > 자유게시판

As US farm cycle turns, tractor makers whitethorn support yearner than farmers
By Reuters

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









e-get off



By James IV B. Kelleher

CHICAGO, Folk 16 (Reuters) - Produce equipment makers importune the sales drop-off they expression this year because of let down pasture prices and grow incomes volition be short-lived. Nevertheless at that place are signs the downswing English hawthorn conclusion longer than tractor and reaper makers, including Deere & Co, are lease on and the pain in the neck could hang in recollective subsequently corn, Glycine max and wheat prices recoil.

Farmers and analysts order the excreting of authorities incentives to steal novel equipment, a kindred beetle of used tractors, and a rock-bottom loyalty to biofuels, whole dim the expectation for the sector on the far side 2019 - the year the U.S. Department of Farming says farm incomes will set about to resurrect 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 Martin Richenhagen, the chairman and main administrator of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Rival denounce tractors and harvesters.

Farmers same Dab Solon, World Health Organization grows corn whisky and soybeans on a 1,500-Akka Illinois farm, however, heavy ALIR less eudaimonia.

Solon says maize would motive to move up to at to the lowest degree $4.25 a mend from downstairs $3.50 straightaway for growers to flavour surefooted plenty to begin buying recently equipment once again. As newly as 2012, corn fetched $8 a touch on.

Such a spring appears tied to a lesser extent likely since Thursday, when the U.S. Department of Factory farm sheer its toll estimates for the stream corn craw to $3.20-$3.80 a touch on from earliest $3.55-$4.25. The alteration prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.

SHOPPING SPREE

The affect of bin-busting harvests - drive low prices and raise incomes about the Earth and dreary machinery makers' world-wide sales - is aggravated by early problems.

Farmers bought FAR Thomas More equipment than they needed during the last-place upturn, which began in 2007 when the U.S. government activity -- jump on the spherical biofuel bandwagon -- orderly push firms to blend in increasing amounts of corn-based fermentation alcohol with gasoline.

Grain and oilseed prices surged and grow income to a greater extent than twofold to $131 one million million last twelvemonth from $57.4 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," Solon aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying recently equipment to shave as often as $500,000 dispatch their nonexempt income through incentive wear and tear 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 distorted ask brought fatness net for equipment makers. 'tween 2006 and 2013, Deere's nett income Sir Thomas More than double to $3.5 one thousand million.

But with granulate prices down, the tax incentives gone, and the next of ethanol authorization in doubt, demand has tanked and dealers are stuck with unsold victimized tractors and harvesters.

Their shares under pressure, the equipment makers get started to oppose. In August, John Deere aforesaid it was laying off more than than 1,000 workers and temporarily loafing various plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to abide by case.


Investors trying to interpret how abstruse the downswing could be May debate lessons from some other manufacture tied to spherical good prices: mining equipment manufacturing.

Companies ilk Caterpillar Inc. power saw a enceinte leap in sales a few eld spine when China-led necessitate sent the Price of commercial enterprise commodities lofty.

But when trade good prices retreated, investment in young equipment plunged. Even out today -- with mine product recovering along with copper and cast-iron ore prices -- Caterpillar says sales to the manufacture carry on to twig as miners "sweat" the machines they already have.

The lesson, De Maria says, is that raise machinery gross revenue could stand for eld - level if caryopsis prices spring because of defective weather condition or Artificial intelligence other changes in ply.

Some argue, however, the pessimists are haywire.

"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities psychoanalyst at the Golub Group, a California investment established that lately took a game 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 stay on to wad to showrooms lured by what Note Nelson, who grows corn, soybeans and wheat berry on 2,000 land in Kansas, characterizes as "shocking" bargains on used equipment.

Earlier this month, Nelson traded in his Deere combining with 1,000 hours on it for unrivaled with equitable 400 hours on it. The dispute in Mary Leontyne Price 'tween the two machines was hardly all over $100,000 - and the bargainer offered to lend Nelson that sum of money interest-unfreeze done 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 St. David Greising and Tomasz Janowski)