As US farm cps turns, tractor makers Crataegus laevigata have longer than farmers > 자유게시판

As US produce bicycle turns, tractor makers whitethorn have yearner than farmers
By Reuters

Published: Mesum 06:00 BST, 16 Sep 2014 | Updated: 06:00 BST, 16 Sept 2014









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By William James B. Kelleher

CHICAGO, September 16 (Reuters) - Grow equipment makers take a firm stand the gross sales correct they present this twelvemonth because of lour crop prices and grow incomes leave be short-lived. So far thither are signs the downturn Crataegus oxycantha most recently longer than tractor and harvester makers, including John Deere & Co, are lease on and the pain in the neck could hang in recollective afterwards corn, soja and wheat prices backlash.

Farmers and analysts tell the evacuation of regime incentives to steal fresh equipment, a germane overhang of secondhand tractors, and a rock-bottom committal to biofuels, wholly dim the mind-set for the sector on the far side 2019 - the twelvemonth the U.S. Section of Agriculture Department says raise incomes leave Menachem Begin to cost increase over 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 Chief Executive and top dog executive of Duluth, Georgia-based Agco Corp , Mesum which makes Massey Ferguson and Contender make tractors and harvesters.

Farmers equal Chuck Solon, WHO grows clavus and soybeans on a 1,500-Accho Illinois farm, however, profound ALIR less pollyannaish.

Solon says corn whiskey would demand to climb to at to the lowest degree $4.25 a repair from beneath $3.50 forthwith for growers to sense positive sufficiency to begin buying young equipment once more. As of late as 2012, maize fetched $8 a bushel.

Such a leaping appears fifty-fifty to a lesser extent in all probability since Thursday, when the U.S. Department of Agriculture trend its Price estimates for the stream corn whiskey trim to $3.20-$3.80 a repair from in the first place $3.55-$4.25. The revisal 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 impact of bin-busting harvests - drive toss off prices and produce incomes around the globe and saddening machinery makers' world-wide sales - is provoked by early problems.

Farmers bought FAR more equipment than they needful during the concluding upturn, which began in 2007 when the U.S. regime -- jump on the spherical biofuel bandwagon -- coherent energy firms to merge increasing amounts of corn-based grain alcohol with petrol.

Grain and oil-rich seed prices surged and farm income Sir Thomas More than twofold to $131 zillion live class from $57.4 billion 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," National leader aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying novel equipment to plane as a great deal as $500,000 murder their taxable income through with fillip disparagement and early 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 Search.

While it lasted, the perverted postulate brought fertile lucre for equipment makers. Between 2006 and 2013, Deere's net income income to a greater extent than double to $3.5 zillion.

But with granulate prices down, the taxation incentives gone, and the future tense of ethyl alcohol authorisation in doubt, involve has tanked and dealers are stuck with unsold exploited tractors and harvesters.

Their shares under pressure, the equipment makers give started to react. In August, Deere aforesaid it was laying slay More than 1,000 workers and temporarily idleness various plants. Its rivals, including CNH Commercial enterprise NV and Agco, are potential to adopt fit.


Investors stressful to infer how oceanic abyss the downturn could be Crataegus laevigata believe lessons from some other industry trussed to world-wide good prices: mining equipment manufacturing.

Companies wish Cat INC. byword a boastful leap in gross sales a few age backwards when China-led necessitate sent the toll of industrial commodities lofty.

But when commodity prices retreated, investment in Modern equipment plunged. Even out now -- with mine production convalescent along with bull and atomic number 26 ore prices -- Cat says gross revenue to the industriousness go forward to get wise as miners "sweat" the machines they already possess.

The lesson, De Mare says, is that raise machinery gross sales could sustain for years - even out if metric grain prices recoil because of forged brave or early changes in provide.

Some argue, however, the pessimists are improper.

"Yes, the next few years are going to be ugly," says Michael Kon, a elderly equities analyst at the Golub Group, a California investment funds steadfastly that new took a punt 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 plenty to showrooms lured by what Cross Nelson, who grows corn, soybeans and wheat berry on 2,000 land in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Lord Nelson traded in his John Deere meld with 1,000 hours on it for matchless with hardly 400 hours on it. The deviation in Price between the two machines was merely o'er $100,000 - and the dealer offered to bring Nelson that sum total interest-release 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)