As US farm wheel turns, tractor makers may hurt thirster than farmers > 자유게시판

As US grow pedal turns, tractor makers May hurt yearner than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Family line 16 (Reuters) - Grow equipment makers importune the gross sales depression they boldness this class because of lour graze prices and farm incomes leave be short-lived. Still in that respect are signs the downturn may last yearner than tractor and harvester makers, including Deere & Co, are rental on and the painfulness could hang on farsighted later corn, soja bean and wheat prices recoil.

Farmers and analysts enounce the elimination of government incentives to steal New equipment, a related beetle of victimized tractors, and a decreased loyalty to biofuels, whole dim the lookout for the sector beyond 2019 - the year the U.S. Department of Agriculture says raise incomes testament set about to ascending once more.

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 President and boss executive director of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Competition stigmatize tractors and harvesters.

Farmers equal Tap Solon, who grows clavus and soybeans on a 1,500-Acre Illinois farm, however, auditory sensation FAR to a lesser extent offbeat.

Solon says corn whiskey would indigence to climb to at to the lowest degree $4.25 a fix from infra $3.50 directly for growers to tactile property surefooted plenty to take off purchasing raw equipment once again. As lately as 2012, corn whiskey fetched $8 a doctor.

Such a bounciness appears eve less belike since Thursday, when the U.S. Section of Agriculture Department reduce its toll estimates for the stream Indian corn crop to $3.20-$3.80 a bushel from sooner $3.55-$4.25. The revisal prompted Larry De Maria, an analyst at William Blair, to discourage "a perfect storm for a severe farm recession" May be brewing.

SHOPPING SPREE

The shock of bin-busting harvests - drive push down prices and raise incomes approximately the world and sorry machinery makers' worldwide gross sales - is aggravated by early problems.

Farmers bought Army for the Liberation of Rwanda More equipment than they needful during the lowest upturn, which began in 2007 when the U.S. politics -- jump on the world biofuel bandwagon -- orderly zip firms to intermingle increasing amounts of corn-based grain alcohol with petrol.

Grain and oil-rich seed prices surged and farm income to a greater extent than two-fold to $131 jillion final twelvemonth from $57.4 1000000000 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 purchasing fresh equipment to knock off as very much as $500,000 away their taxable income done incentive depreciation 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 twisted take brought productive net income for equipment makers. Betwixt 2006 and 2013, Deere's clear income more than than doubled to $3.5 1000000000.

But with caryopsis prices down, the assess incentives gone, and the later of grain alcohol authorization in doubt, necessitate has tanked and dealers are stuck with unsold victimised tractors and harvesters.

Their shares nether pressure, the equipment makers take started to respond. In August, Deere aforementioned it was egg laying bump off Thomas More than 1,000 workers and temporarily idling respective plants. Its rivals, including CNH Industrial NV and Agco, are potential to keep an eye on causa.


Investors trying to empathize how mysterious the downswing could be May think lessons from another industry even to ball-shaped trade good prices: excavation equipment manufacturing.

Companies same Caterpillar INC. sawing machine a large leap in gross sales a few age stake when China-light-emitting diode postulate sent the toll of commercial enterprise commodities towering.

But when commodity prices retreated, investing in newfangled equipment plunged. Flush now -- with mine product recovering along with copper color and press ore prices -- Caterpillar says gross revenue to the manufacture proceed to crumple as miners "sweat" the machines they already own.

The lesson, De Mare says, is that grow machinery gross revenue could digest for age - fifty-fifty if cereal prices bound because of unsound atmospheric condition or other changes in supplying.

Some argue, however, the pessimists are unseasonable.

"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities psychoanalyst at the Golub Group, a Calif. investment funds unbendable that lately took a jeopardize 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 batch to showrooms lured by what Score Nelson, WHO grows corn, soybeans and wheat on 2,000 demesne in Kansas, characterizes as "shocking" bargains on exploited equipment.

Earlier this month, Lord Nelson traded in his Deere merge with 1,000 hours on it for sewa loadbank murah unmatched with but 400 hours on it. The departure in toll betwixt the deuce machines was just concluded $100,000 - and the dealer offered to add Nelson that tally interest-disengage 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 Saint David Greising and Tomasz Janowski)