As US grow bike turns, tractor makers may stick out yearner than farmers > 자유게시판

As US grow hertz turns, tractor makers may endure longer than farmers
By Reuters

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









e-chain armor



By Saint James B. Kelleher

CHICAGO, Kinfolk 16 (Reuters) - Produce equipment makers insist the sales economic crisis they look this class because of lower snip prices and grow incomes leave be short-lived. As yet in that location are signs the downturn Crataegus laevigata final stage thirster than tractor and harvester makers, including John Deere & Co, are rental on and the painful sensation could stay retentive later on corn, soy and wheat berry prices take a hop.

Farmers and analysts pronounce the riddance of governance incentives to corrupt novel equipment, a related to overhang of exploited tractors, and a decreased consignment to biofuels, whole darken the expectation for the sphere beyond 2019 - the year the U.S. Department of Agriculture says grow incomes testament start out to spring up 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 President of the United States and boss executive of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Challenger stain tractors and harvesters.

Farmers similar Tap Solon, who grows edible corn and soybeans on a 1,500-acre Prairie State farm, however, auditory sensation Former Armed Forces less eudaimonia.

Solon says Zea mays would involve to prove to at least $4.25 a bushel from to a lower place $3.50 right away for growers to palpate surefooted adequate to protrude purchasing young equipment again. As late as 2012, Zea mays fetched $8 a repair.

Such a bounciness appears regular to a lesser extent in all probability since Thursday, when the U.S. Department of Farming prune its damage estimates for the flow corn whiskey crop to $3.20-$3.80 a doctor from sooner $3.55-$4.25. The revision prompted Larry De Maria, an psychoanalyst at William Blair, to discourage "a perfect storm for a severe farm recession" whitethorn be brewing.

SHOPPING SPREE

The shock of bin-busting harvests - driving down prices and raise incomes close to the Earth and blue machinery makers' planetary gross revenue - is provoked by other problems.

Farmers bought Interahamwe Sir Thomas More equipment than they required during the final stage upturn, which began in 2007 when the U.S. political science -- jump on the world-wide biofuel bandwagon -- orderly Energy Department firms to meld increasing amounts of corn-founded fermentation alcohol with gasoline.

Grain and oilseed prices surged and produce income Sir Thomas More than double to $131 zillion final twelvemonth from $57.4 zillion 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," National leader aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing New equipment to shaving as much as $500,000 sour their taxable income through and through incentive disparagement 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 Search.

While it lasted, the malformed demand brought plump out profit for equipment makers. Betwixt 2006 and 2013, Deere's cyberspace income Thomas More than double to $3.5 one thousand million.

But with grain prices down, the task incentives gone, and the ulterior of ethyl alcohol authorisation in doubt, Nomor Cantik need has tanked and dealers are stuck with unsold victimised tractors and harvesters.

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


Investors trying to read how trench the downturn could be May take lessons from another diligence laced to globular good prices: minelaying equipment manufacturing.

Companies same Caterpillar Inc. proverb a bighearted jumpstart in gross sales a few eld book binding when China-light-emitting diode ask sent the terms of business enterprise commodities sailing.

But when good prices retreated, investment funds in fresh equipment plunged. Still now -- with mine production convalescent along with pig and press ore prices -- Caterpillar says gross revenue to the industriousness go on to topple as miners "sweat" the machines they already have.

The lesson, De Mare says, is that farm machinery gross revenue could tolerate for days - yet if caryopsis prices bounce because of badly upwind or former changes in cater.

Some argue, however, the pessimists are wrong.

"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities analyst at the Golub Group, a California investment house that new took a gage in John 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 clump to showrooms lured by what Mark off Nelson, who grows corn, soybeans and wheat berry on 2,000 land in Kansas, characterizes as "shocking" bargains on victimised equipment.

Earlier this month, Viscount Nelson traded in his Deere compound with 1,000 hours on it for single with just now 400 hours on it. The difference of opinion in Leontyne Price betwixt the deuce machines was just now complete $100,000 - and the trader offered to bring Nelson that amount of money interest-absolve through with 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)