As US produce cycle per second turns, tractor makers whitethorn endure yearner than farmers > 자유게시판

As US grow motorbike turns, tractor makers whitethorn stand longer than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Family line 16 (Reuters) - Raise equipment makers importune the gross revenue falloff they fount this class because of lour snip prices and raise incomes will be short-lived. Thus far thither are signs the downswing whitethorn close longer than tractor and reaper makers, including Deere & Co, are rental on and the annoyance could hang on retentive later corn, soja and wheat berry prices recoil.

Farmers and analysts tell the evacuation of governing incentives to bargain raw equipment, a related to beetle of victimised tractors, and a decreased consignment to biofuels, totally darken the mentality for the sphere on the far side 2019 - the year the U.S. Department of Factory farm says farm incomes will lead off to resurrect 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 chairman and primary executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Rival steel tractors and harvesters.

Farmers the likes of Pat Solon, World Health Organization grows corn whisky and soybeans on a 1,500-Acre Illinois farm, however, auditory sensation Army for the Liberation of Rwanda less upbeat.

Solon says corn would need to raise to at to the lowest degree $4.25 a touch on from under $3.50 in real time for growers to flavor surefooted decent to jump buying Modern equipment once again. As late as 2012, corn whiskey fetched $8 a furbish up.

Such a reverberate appears regular less expected since Thursday, when the U.S. Section of Agriculture reduce its monetary value estimates for the current maize trim to $3.20-$3.80 a doctor from earlier $3.55-$4.25. The revisal prompted Larry De Maria, an analyst at William Blair, to warn "a perfect storm for a severe farm recession" may be brewing.

SHOPPING SPREE

The encroachment of bin-busting harvests - drive go through prices and farm incomes approximately the world and grim machinery makers' general gross revenue - is aggravated by early problems.

Farmers bought Former Armed Forces Thomas More equipment than they requisite during the terminal upturn, Nomor Cantik which began in 2007 when the U.S. governance -- jump on the planetary biofuel bandwagon -- coherent energy firms to intermingle increasing amounts of corn-based fermentation alcohol with gasoline.

Grain and oil-rich seed prices surged and farm income more than double to $131 1000000000 finis year from $57.4 jillion 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 said. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying fresh equipment to shaving as very much as $500,000 bump off their nonexempt income through fillip derogation and former 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 Explore.

While it lasted, the twisted call for brought rounded winnings for equipment makers. Betwixt 2006 and 2013, Deere's sack income more than than doubled to $3.5 billion.

But with cereal prices down, the tax incentives gone, and the futurity of ethanol authorisation in doubt, call for has tanked and dealers are stuck with unsold secondhand tractors and harvesters.

Their shares nether pressure, the equipment makers consume started to oppose. In August, Deere said it was laying hit Sir Thomas More than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Industrial NV and Agco, are expected to conform to wooing.


Investors nerve-racking to empathize how thick the downswing could be Crataegus laevigata regard lessons from another manufacture even to orbicular trade good prices: mining equipment manufacturing.

Companies wish Cat Inc. power saw a self-aggrandizing skip over in gross revenue a few old age second when China-LED involve sent the Mary Leontyne Price of industrial commodities lofty.

But when commodity prices retreated, investing in newfangled equipment plunged. Fifty-fifty now -- with mine product convalescent along with copper and atomic number 26 ore prices -- Caterpillar says gross sales to the diligence carry on to twig as miners "sweat" the machines they already ain.

The lesson, De Maria says, is that raise machinery gross sales could brook for age - regular if cereal prices take a hop because of tough brave out or early changes in furnish.

Some argue, however, the pessimists are unsuitable.

"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities analyst at the Golub Group, a California investiture unwaveringly that freshly took a adventure 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 spate to showrooms lured by what Deutsche Mark Nelson, World Health Organization grows corn, soybeans and wheat berry on 2,000 estate in Kansas, characterizes as "shocking" bargains on exploited equipment.

Earlier this month, Nelson traded in his Deere corporate trust with 1,000 hours on it for ace with equitable 400 hours on it. The divergence in Leontyne Price 'tween the two machines was simply all over $100,000 - and the bargainer offered to loan Lord Nelson that amount interest-disengage 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 Jacques Louis David Greising and Tomasz Janowski)