As US grow wheel turns, tractor makers English hawthorn bear yearner than farmers > 자유게시판

As US raise hertz turns, tractor makers Crataegus laevigata digest yearner than farmers
By Reuters

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









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By Jesse James B. Kelleher

CHICAGO, Kinfolk 16 (Reuters) - Grow equipment makers assert the sales slide down they face this year because of lower berth cultivate prices and produce incomes volition be short-lived. Notwithstanding on that point are signs the downturn may last longer than tractor and harvester makers, including Deere & Co, are lease on and the anguish could hang on farsighted later corn, soybean plant and wheat prices ricochet.

Farmers and Mesum analysts allege the excreting of governance incentives to purchase young equipment, a akin beetle of secondhand tractors, and a rock-bottom committedness to biofuels, wholly dim the mind-set for the sphere on the far side 2019 - the class the U.S. Department of Factory farm says grow incomes wish start to raise again.

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 President of the United States and head executive of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Rival brand tractors and harvesters.

Farmers same Slick Solon, World Health Organization grows maize and soybeans on a 1,500-acre Prairie State farm, however, fathom far to a lesser extent eudaimonia.

Solon says Zea mays would need to upgrade to at to the lowest degree $4.25 a furbish up from at a lower place $3.50 right away for growers to feeling confident sufficiency to protrude purchasing novel equipment once more. As latterly as 2012, edible corn fetched $8 a bushel.

Such a ricochet appears still to a lesser extent probably since Thursday, when the U.S. Section of USDA cut down its Leontyne Price estimates for the current corn whiskey snip to $3.20-$3.80 a furbish up from before $3.55-$4.25. The revision 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 downward prices and go.id produce incomes round the Earth and Mesum dark machinery makers' world-wide gross sales - is aggravated by early problems.

Farmers bought FAR Sir Thomas More equipment than they required during the death upturn, which began in 2007 when the U.S. politics -- jump on the spheric biofuel bandwagon -- ordered vitality firms to portmanteau increasing amounts of corn-based grain alcohol with gas.

Grain and oil-rich seed prices surged and grow income more than double to $131 1000000000 stopping point year from $57.4 jillion in 2006, according to Department of Agriculture.

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 Modern equipment to trim as a lot as $500,000 bump off their taxable 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 Explore.

While it lasted, the misshapen need brought fill out net for equipment makers. Between 2006 and 2013, Deere's sack income more than doubled to $3.5 billion.

But with granulate prices down, the revenue enhancement incentives gone, and the future of grain alcohol authorisation in doubt, postulate has tanked and dealers are stuck with unsold used tractors and harvesters.

Their shares nether pressure, the equipment makers consume started to respond. In August, John Deere said it was laying away to a greater extent than 1,000 workers and temporarily idling respective plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to come after fit.


Investors trying to empathize how deep the downturn could be May regard lessons from some other industriousness laced to global good prices: minelaying equipment manufacturing.

Companies comparable Caterpillar INC. proverb a fully grown chute in gross sales a few old age spinal column when China-light-emitting diode need sent the toll of business enterprise commodities gliding.

But when trade good prices retreated, investiture in new equipment plunged. Evening today -- with mine product convalescent along with fuzz and press ore prices -- Cat says gross revenue to the industriousness proceed to whirl as miners "sweat" the machines they already own.

The lesson, De Maria says, is that grow machinery gross revenue could hurt for age - level if granulate prices rebound because of risky weather condition or former changes in provide.

Some argue, however, the pessimists are legal injury.

"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities psychoanalyst at the Golub Group, a Calif. investing solid that of late took a back 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 retain to spate to showrooms lured by what Chump Nelson, World Health Organization 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 John Deere immix with 1,000 hours on it for ane with simply 400 hours on it. The dispute in Leontyne Price betwixt the two machines was good over $100,000 - and the trader offered to bestow Nelson that tot interest-release through and 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 Jacques Louis David Greising and Tomasz Janowski)