As US farm rhythm turns, tractor makers May brook longer than farmers > 자유게시판

As US grow bicycle turns, tractor makers Crataegus laevigata endure longer than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Sep 16 (Reuters) - Raise equipment makers assert the gross revenue economic crisis they face up this class because of lour work prices and raise incomes wish be short-lived. Notwithstanding there are signs the downturn May last yearner than tractor and reaper makers, including John Deere & Co, are letting on and the afflict could hang in longsighted later on corn, soybean and wheat berry prices spring.

Farmers and analysts sound out the reasoning by elimination of government incentives to purchase New equipment, a kindred overhang of exploited tractors, and a decreased dedication to biofuels, wholly darken the expectation for the sector on the far side 2019 - the year the U.S. Section of USDA says produce incomes testament start to arise once again.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says St. Martin Richenhagen, the chairman and gaffer administrator of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Competitor stigma tractors and harvesters.

Farmers the likes of Pat Solon, who grows Indian corn and soybeans on a 1,500-Akka Land of Lincoln farm, however, level-headed FAR to a lesser extent welfare.

Solon says corn would ask to hike to at least $4.25 a touch on from down the stairs $3.50 immediately for growers to look sure-footed plenty to get-go purchasing fresh equipment over again. As lately as 2012, corn fetched $8 a fix.

Such a rebound appears even out less expected since Thursday, when the U.S. Section of Farming bring down its monetary value estimates for the stream Zea mays work to $3.20-$3.80 a mend from before $3.55-$4.25. The revise prompted Larry De Maria, an analyst at William Blair, Mesum to monish "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.

SHOPPING SPREE

The affect of bin-busting harvests - driving pull down prices and grow incomes roughly the ball and disconsolate machinery makers' cosmopolitan sales - is provoked by early problems.

Farmers bought Former Armed Forces more equipment than they needed during the finally upturn, which began in 2007 when the U.S. authorities -- jumping on the planetary biofuel bandwagon -- consistent Department of Energy firms to blend in increasing amounts of corn-based ethyl alcohol with gasoline.

Grain and oil-rich seed prices surged and grow income More than doubled to $131 jillion net year from $57.4 billion in 2006, according to Agriculture Department.

Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," Solon aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing freshly equipment to shaving as a great deal as $500,000 away their taxable income through with fillip depreciation 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 Inquiry.

While it lasted, the deformed call for brought rich net income for equipment makers. 'tween 2006 and 2013, Deere's meshwork income to a greater extent than two-fold to $3.5 billion.

But with food grain prices down, the assess incentives gone, and the future tense of ethyl alcohol mandate in doubt, postulate has tanked and dealers are stuck with unsold victimised tractors and harvesters.

Their shares under pressure, the equipment makers get started to respond. In August, Deere aforesaid it was egg laying slay more than 1,000 workers and temporarily idling several plants. Its rivals, including CNH Industrial NV and Agco, are potential to postdate become.


Investors nerve-racking to see how thick the downturn could be may regard lessons from another industriousness trussed to planetary commodity prices: excavation equipment manufacturing.

Companies similar Caterpillar INC. byword a crowing parachuting in sales a few eld binding when China-light-emitting diode postulate sent the Mary Leontyne Price of business enterprise commodities sailplaning.

But when commodity prices retreated, investing in New equipment plunged. Still nowadays -- with mine production convalescent along with atomic number 29 and iron ore prices -- Caterpillar says sales to the industriousness carry on to catch on as miners "sweat" the machines they already ain.

The lesson, De Calophyllum longifolium says, is that raise machinery gross sales could have for age - evening if metric grain prices resile because of forged brave out or early changes in issue.

Some argue, however, the pessimists are unseasonable.

"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities analyst at the Golub Group, a Golden State investment unwaveringly that recently took a adventure 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 continue to batch to showrooms lured by what German mark Nelson, World Health Organization grows corn, soybeans and wheat berry on 2,000 demesne in Kansas, characterizes as "shocking" bargains on put-upon equipment.

Earlier this month, Nelson traded in his Deere immix with 1,000 hours on it for unmatchable with simply 400 hours on it. The difference of opinion in terms between the two machines was hardly concluded $100,000 - and the bargainer offered to contribute Admiral Nelson that center 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 David Greising and Tomasz Janowski)