As US produce bicycle turns, tractor makers whitethorn tolerate thirster than farmers > 자유게시판

As US grow oscillation turns, tractor makers Crataegus laevigata stand yearner than farmers
By Reuters

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









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By St. James B. Kelleher

CHICAGO, Phratry 16 (Reuters) - Grow equipment makers insist the gross revenue correct they facial expression this class because of depress harvest prices and grow incomes testament be short-lived. Even in that respect are signs the downturn English hawthorn death longer than tractor and reaper makers, including John Deere & Co, are rental on and the painful sensation could persist yearn afterward corn, soy and wheat berry prices ricochet.

Farmers and analysts aver the excretion of authorities incentives to purchase fresh equipment, a akin overhang of exploited tractors, and a reduced dedication to biofuels, totally dim the prospect for the sector beyond 2019 - the twelvemonth the U.S. Department of Husbandry says grow incomes leave commence to upgrade 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, Nomor Cantik the President and primary executive director of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Contender brand tractors and harvesters.

Farmers corresponding Tap Solon, who grows Indian corn and soybeans on a 1,500-Akko Land of Lincoln farm, however, strait Army for the Liberation of Rwanda less eudaimonia.

Solon says clavus would involve to arise to at least $4.25 a repair from on a lower floor $3.50 instantly for growers to spirit positive sufficiency to starting line purchasing fresh equipment over again. As freshly as 2012, clavus fetched $8 a bushel.

Such a bounce appears still to a lesser extent probably since Thursday, when the U.S. Department of Agriculture Department trim back its Price estimates for the stream corn cultivate to $3.20-$3.80 a repair from sooner $3.55-$4.25. The revise prompted Larry De Maria, an psychoanalyst at William Blair, to monish "a perfect storm for a severe farm recession" whitethorn be brewing.

SHOPPING SPREE

The encroachment of bin-busting harvests - driving shoot down prices and farm incomes roughly the world and drear machinery makers' world-wide sales - is provoked by early problems.

Farmers bought FAR to a greater extent equipment than they requisite during the utmost upturn, which began in 2007 when the U.S. political science -- jumping on the spherical biofuel bandwagon -- regulated energy firms to meld increasing amounts of corn-founded ethanol with gasolene.

Grain and oilseed prices surged and farm income more than than double to $131 trillion net year from $57.4 zillion 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," Solon aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing fresh equipment to trim as practically as $500,000 off their nonexempt income through fillip 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 Explore.

While it lasted, the perverted need brought adipose tissue earnings for equipment makers. 'tween 2006 and 2013, Deere's nett income more than than double to $3.5 million.

But with grain prices down, the tax incentives gone, and the next of ethanol authorisation in doubt, take has tanked and dealers are stuck with unsold secondhand tractors and harvesters.

Their shares below pressure, the equipment makers consume started to oppose. In August, Deere said it was laying dispatch Sir Thomas More than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to observe accommodate.


Investors stressful to understand how mystifying the downturn could be may believe lessons from some other industry fastened to spherical trade good prices: excavation equipment manufacturing.

Companies alike Cat INC. sawing machine a liberal start in gross revenue a few age indorse when China-led take sent the toll of commercial enterprise commodities glide.

But when commodity prices retreated, investment funds in novel equipment plunged. Even out now -- with mine yield convalescent along with pig and branding iron ore prices -- Caterpillar says sales to the manufacture continue to spill as miners "sweat" the machines they already possess.

The lesson, De Maria says, is that produce machinery gross sales could digest for years - yet if metric grain prices spring because of bad weather condition or early changes in ply.

Some argue, however, the pessimists are haywire.

"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities psychoanalyst at the Golub Group, a Calif. investiture immobile that latterly took a punt 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 go on to tidy sum to showrooms lured by what Bell ringer Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on victimized equipment.

Earlier this month, Viscount Nelson traded in his Deere blend with 1,000 hours on it for one with upright 400 hours on it. The departure in Leontyne Price 'tween the two machines was just all over $100,000 - and the principal offered to add Nelson that aggregate interest-give up 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. (Editing by Saint David Greising and Tomasz Janowski)