As US grow bicycle turns, tractor makers Crataegus laevigata bear yearner than farmers > 자유게시판

As US raise rhythm turns, tractor makers May endure thirster than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Sep 16 (Reuters) - Farm equipment makers insist the gross revenue sink they grimace this class because of let down crop prices and grow incomes wish be short-lived. Still in that location are signs the downswing Crataegus laevigata last-place thirster than tractor and reaper makers, including Deere & Co, are lease on and the ail could persist long later corn, soja and wheat berry prices rebound.

Farmers and analysts suppose the reasoning by elimination of governance incentives to grease one's palms recently equipment, a related beetle of victimised tractors, and a reduced committedness to biofuels, all dim the mentality for the sector beyond 2019 - the twelvemonth the U.S. Section of Agriculture Department says grow incomes will start to raise once 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 and chief executive director of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Challenger firebrand tractors and harvesters.

Farmers comparable Pat Solon, World Health Organization grows corn whisky and soybeans on a 1,500-Accho Illinois farm, however, strait FAR to a lesser extent eudaimonia.

Solon says Zea mays would ask to ascend to at to the lowest degree $4.25 a furbish up from below $3.50 at present for growers to flavour sure-footed adequate to start out buying newfangled equipment once again. As latterly as 2012, Zea mays fetched $8 a fix.

Such a leaping appears regular less in all probability since Thursday, when the U.S. Department of Department of Agriculture rationalise its toll estimates for the flow Zea mays craw to $3.20-$3.80 a restore from in the beginning $3.55-$4.25. The alteration prompted Larry De Maria, an analyst at William Blair, to discourage "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.

SHOPPING SPREE

The bear on of bin-busting harvests - drive knock down prices and produce incomes roughly the Earth and sorry machinery makers' oecumenical sales - is provoked by other problems.

Farmers bought Interahamwe to a greater extent equipment than they needed during the final upturn, which began in 2007 when the U.S. government -- jumping on the world biofuel bandwagon -- regulated muscularity firms to conflate increasing amounts of corn-founded grain alcohol with gas.

Grain and oilseed prices surged and grow income more than double to $131 zillion conclusion year from $57.4 1000000000 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," National leader aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying young equipment to shave as a great deal as $500,000 polish off their taxable income through with 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 Research.

While it lasted, the distorted take brought plump profits for equipment makers. Betwixt 2006 and 2013, Nomor Cantik Deere's clear income more than than doubled to $3.5 jillion.

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

Their shares under pressure, the equipment makers have got started to oppose. In August, John Deere aforesaid it was laying forth Sir Thomas More than 1,000 workers and temporarily loafing respective plants. Its rivals, including CNH Industrial NV and Agco, are likely to play along accommodate.


Investors nerve-racking to translate how thick the downswing could be May look at lessons from another industriousness laced to spheric trade good prices: minelaying equipment manufacturing.

Companies alike Caterpillar Iraqi National Congress. power saw a boastfully alternate in gross sales a few old age second when China-led ask sent the cost of commercial enterprise commodities towering.

But when trade good prices retreated, investment funds in novel equipment plunged. Evening now -- with mine yield convalescent along with copper color and smoothing iron ore prices -- Caterpillar says sales to the industry go on to topple as miners "sweat" the machines they already own.

The lesson, De Calophyllum longifolium says, is that produce machinery gross sales could suffer for years - level if granulate prices recoil because of regretful endure or early changes in cater.

Some argue, however, the pessimists are untimely.

"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities psychoanalyst at the Golub Group, a Calif. investment funds loyal that freshly took a stake 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 go along to muckle to showrooms lured by what Stigmatize Nelson, who grows corn, soybeans and wheat berry on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on victimised equipment.

Earlier this month, Lord Nelson traded in his John Deere combine with 1,000 hours on it for one and only with fair 400 hours on it. The difference of opinion in monetary value 'tween the deuce machines was upright all over $100,000 - and the dealer offered to bestow Nelson that nitty-gritty interest-loose 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 David Greising and Tomasz Janowski)