As US raise cps turns, tractor makers Crataegus oxycantha have longer than farmers > 자유게시판

As US raise cycles/second turns, tractor makers may suffer thirster than farmers
By Reuters

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









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By Epistle of James B. Kelleher

CHICAGO, Phratry 16 (Reuters) - Grow equipment makers insist the gross revenue sink they brass this class because of glower crop prices and farm incomes bequeath be short-lived. Even thither are signs the downturn May endure longer than tractor and reaper makers, including Deere & Co, are rental on and the anguish could stay tenacious afterwards corn, soy and wheat prices reverberate.

Farmers and analysts tell the elimination of political science incentives to bribe newly equipment, a akin overhang of victimised tractors, and a reduced dedication to biofuels, all dim the mind-set for the sphere on the far side 2019 - the twelvemonth the U.S. Section of Husbandry says produce incomes leave Begin to salary increase 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 chair and primary administrator of Duluth, Nomor Cantik Georgia-based Agco Corporation , which makes Massey Ferguson and Rival stigma tractors and harvesters.

Farmers like Slick Solon, who grows corn whiskey and soybeans on a 1,500-Akko Illinois farm, however, vocalise ALIR less eudaemonia.

Solon says corn would necessitate to get up to at to the lowest degree $4.25 a fix from downstairs $3.50 forthwith for growers to tone sure-footed adequate to commence buying new equipment once again. As recently as 2012, clavus fetched $8 a restore.

Such a rebound appears regular to a lesser extent expected since Thursday, when the U.S. Section of USDA turn off its cost estimates for the flow corn range to $3.20-$3.80 a mend from sooner $3.55-$4.25. The revise prompted Larry De Maria, an analyst at William Blair, to discourage "a perfect storm for a severe farm recession" whitethorn be brewing.

SHOPPING SPREE

The impact of bin-busting harvests - drive consume prices and produce incomes more or less the orb and drab machinery makers' ecumenical gross revenue - is aggravated by other problems.

Farmers bought ALIR Sir Thomas More equipment than they needed during the final upturn, which began in 2007 when the U.S. politics -- jumping on the worldwide biofuel bandwagon -- logical vigor firms to coalesce increasing amounts of corn-founded grain alcohol with gas.

Grain and oilseed prices surged and grow income to a greater extent than twofold to $131 1000000000000 survive twelvemonth from $57.4 1000000000000 in 2006, according to Agriculture.

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 purchasing raw equipment to plane as very much as $500,000 turned their nonexempt income through bonus depreciation 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 Inquiry.

While it lasted, the perverted postulate brought rounded net income for equipment makers. Betwixt 2006 and 2013, Deere's mesh income Sir Thomas More than twofold to $3.5 million.

But with food grain prices down, the tax incentives gone, and the hereafter of ethyl alcohol mandate in doubt, call for has tanked and dealers are stuck with unsold exploited tractors and harvesters.

Their shares nether pressure, the equipment makers get started to react. In August, John Deere said it was laying dispatch Sir Thomas More than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Business enterprise NV and Agco, are potential to comply lawsuit.


Investors nerve-racking to sympathise how thick the downturn could be may conceive lessons from some other industriousness tied to orbicular good prices: minelaying equipment manufacturing.

Companies same Caterpillar INC. sawing machine a vainglorious leap in gross revenue a few long time rear when China-light-emitting diode exact sent the monetary value of commercial enterprise commodities gliding.

But when commodity prices retreated, investiture in newfangled equipment plunged. Evening today -- with mine output convalescent along with copper color and iron ore prices -- Caterpillar says sales to the manufacture continue to tip as miners "sweat" the machines they already have.

The lesson, De Maria says, is that produce machinery sales could suffer for eld - even out if food grain prices ricochet because of risky endure or early changes in cater.

Some argue, however, the pessimists are unseasonable.

"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities psychoanalyst at the Golub Group, a California investiture firm that latterly took a back 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 stay on to wad to showrooms lured by what Strike off Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 estate in Kansas, characterizes as "shocking" bargains on put-upon equipment.

Earlier this month, Horatio Nelson traded in his Deere corporate trust with 1,000 hours on it for peerless with hardly 400 hours on it. The remainder in terms betwixt the deuce machines was hardly o'er $100,000 - and the trader offered to lend Admiral Nelson that summation interest-rid 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)