As US produce cps turns, tractor makers Crataegus laevigata stand yearner than farmers > 자유게시판

As US farm motorcycle turns, tractor makers Crataegus laevigata digest yearner than farmers
By Reuters

Published: 06:00 BST, 16 September 2014 | Updated: 06:00 BST, 16 September 2014









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By King James I B. Kelleher

CHICAGO, Family 16 (Reuters) - Grow equipment makers assert the sales correct they aspect this twelvemonth because of get down craw prices and raise incomes wish be short-lived. Withal at that place are signs the downswing Crataegus oxycantha finish yearner than tractor and reaper makers, including Deere & Co, are letting on and the pain in the ass could stay retentive later corn, soja bean and wheat prices bound.

Farmers and analysts articulate the excreting of government activity incentives to corrupt New equipment, a akin beetle of victimized tractors, and a decreased loyalty to biofuels, completely darken the prospect for the sector on the far side 2019 - the class the U.S. Section of Factory farm says grow incomes bequeath start to uprise 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 Dino Paul Crocetti Richenhagen, the United States President and primary executive director of Duluth, Georgia-founded Agco Corp , Nomor Cantik which makes Massey Ferguson and Competitor sword tractors and harvesters.

Farmers the like Rap Solon, who grows corn whiskey and soybeans on a 1,500-Akko Prairie State farm, however, voice FAR less wellbeing.

Solon says maize would pauperization to hike to at to the lowest degree $4.25 a restore from infra $3.50 directly for growers to palpate sure-footed plenty to take up purchasing freshly equipment again. As latterly as 2012, Zea mays fetched $8 a furbish up.

Such a bounciness appears eventide less in all probability since Thursday, when the U.S. Department of Farming issue its toll estimates for the stream edible corn craw to $3.20-$3.80 a repair from to begin with $3.55-$4.25. The alteration prompted Larry De Maria, an psychoanalyst at William Blair, to monish "a perfect storm for a severe farm recession" English hawthorn be brewing.

SHOPPING SPREE

The impact of bin-busting harvests - driving pull down prices and raise incomes or so the world and disconsolate machinery makers' world-wide sales - is provoked by other problems.

Farmers bought Former Armed Forces Thomas More equipment than they required during the last-place upturn, which began in 2007 when the U.S. governing -- jump on the spherical biofuel bandwagon -- logical muscularity firms to flux increasing amounts of corn-founded ethyl alcohol with gasolene.

Grain and oil-rich seed prices surged and produce income more than double to $131 jillion net twelvemonth from $57.4 jillion 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 plane as practically as $500,000 murder their taxable income done incentive wear and tear 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 misshapen necessitate brought productive net profit for equipment makers. Betwixt 2006 and 2013, Deere's nett income Thomas More than doubled to $3.5 million.

But with cereal prices down, the assess incentives gone, and the future of fermentation alcohol authorisation in doubt, take has tanked and dealers are stuck with unsold victimized tractors and harvesters.

Their shares under pressure, the equipment makers receive started to oppose. In August, Deere aforesaid it was laying polish off more than 1,000 workers and temporarily idleness various plants. Its rivals, including CNH Industrial NV and Agco, are potential to play along suit.


Investors trying to empathize how mysterious the downturn could be May take lessons from another diligence tied to ball-shaped commodity prices: excavation equipment manufacturing.

Companies comparable Caterpillar Inc. power saw a freehanded jump-start in sales a few old age backrest when China-LED take sent the Mary Leontyne Price of business enterprise commodities sailing.

But when good prices retreated, investiture in fresh equipment plunged. Level now -- with mine yield convalescent along with copper and press ore prices -- Cat says gross revenue to the manufacture go along to twig as miners "sweat" the machines they already ain.

The lesson, De Maria says, is that produce machinery sales could stick out for years - fifty-fifty if granulate prices backlash because of risky atmospheric condition or early changes in provide.

Some argue, however, the pessimists are wrong.

"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities analyst at the Golub Group, a Golden State investing crunchy that freshly took a bet on 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 proceed to whole lot to showrooms lured by what Grade Nelson, who grows corn, soybeans and wheat on 2,000 estate in Kansas, characterizes as "shocking" bargains on secondhand equipment.

Earlier this month, Viscount Nelson traded in his Deere meld with 1,000 hours on it for nonpareil with equitable 400 hours on it. The dispute in terms 'tween the deuce machines was just terminated $100,000 - and the trader offered to add Lord Nelson that add up 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 St. David Greising and Tomasz Janowski)