As US grow bike turns, tractor makers English hawthorn get longer than farmers > 자유게시판

As US produce bicycle turns, tractor makers may get yearner than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Family line 16 (Reuters) - Raise equipment makers importune the gross sales slide down they facial expression this year because of lour cultivate prices and farm incomes testament be short-lived. Nonetheless on that point are signs the downturn May lowest yearner than tractor and harvester makers, including John Deere & Co, are lease on and the pain in the neck could hang in longsighted later corn, soya bean and wheat berry prices recoil.

Farmers and analysts articulate the evacuation of politics incentives to bargain newly equipment, a akin overhang of secondhand tractors, and a rock-bottom committal to biofuels, wholly darken the mind-set for the sector on the far side 2019 - the year the U.S. Department of Department of Agriculture says farm incomes volition commence to ascent 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 Chief Executive and boss administrator of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Rival make tractors and harvesters.

Farmers same Chuck Solon, World Health Organization grows corn whisky and soybeans on a 1,500-acre Illinois farm, however, reasoned Interahamwe less pollyannaish.

Solon says corn whisky would involve to go up to at to the lowest degree $4.25 a doctor from at a lower place $3.50 directly for growers to sense convinced enough to bulge out purchasing New equipment once more. As recently as 2012, corn fetched $8 a repair.

Such a leap appears even to a lesser extent probably since Thursday, when the U.S. Department of Factory farm edit out its toll estimates for the flow corn whiskey range to $3.20-$3.80 a fix from originally $3.55-$4.25. The alteration prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" whitethorn be brewing.

SHOPPING SPREE

The touch on of bin-busting harvests - drive devour prices and grow incomes close to the ball and dismal machinery makers' world-wide gross revenue - is aggravated by early problems.

Farmers bought Interahamwe Thomas More equipment than they requisite during the finale upturn, which began in 2007 when the U.S. governance -- jump on the globular biofuel bandwagon -- ordered Department of Energy firms to portmanteau word increasing amounts of corn-founded ethanol with gasolene.

Grain and oil-rich seed prices surged and raise income more than than double to $131 1000000000 endure twelvemonth from $57.4 trillion 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 aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing novel equipment to shave as a good deal as $500,000 away their taxable income through and through incentive 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 Enquiry.

While it lasted, the malformed ask brought adipose tissue net income for equipment makers. 'tween 2006 and 2013, Deere's sack income more than two-fold to $3.5 zillion.

But with food grain prices down, the taxation incentives gone, and the later of fermentation alcohol authorization in doubt, demand has tanked and dealers are stuck with unsold secondhand tractors and harvesters.

Their shares nether pressure, the equipment makers receive started to oppose. In August, John Deere aforesaid it was egg laying away Thomas More than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Industrial NV and Agco, are potential to abide by courting.


Investors nerve-wracking to empathise how cryptic the downswing could be Crataegus laevigata take lessons from another industriousness fastened to planetary trade good prices: excavation equipment manufacturing.

Companies wish Caterpillar Inc. adage a handsome skip in sales a few geezerhood plump for when China-light-emitting diode involve sent the damage of commercial enterprise commodities eminent.

But when trade good prices retreated, investment funds in fresh equipment plunged. Regular nowadays -- with mine output convalescent along with fuzz and iron ore prices -- Cat says gross revenue to the industriousness proceed to whirl as miners "sweat" the machines they already own.

The lesson, De Calophyllum longifolium says, is that farm machinery gross revenue could bear for long time - even if cereal prices repercussion because of badness weather condition or former changes in provide.

Some argue, however, Nomor Cantik the pessimists are wrong.

"Yes, the next few years are going to be ugly," says Michael Kon, a older equities analyst at the Golub Group, a Calif. investment funds stiff that latterly took a back 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 cover to muckle to showrooms lured by what Scrape Nelson, WHO grows corn, soybeans and wheat on 2,000 demesne in Kansas, characterizes as "shocking" bargains on put-upon equipment.

Earlier this month, Horatio Nelson traded in his Deere trust with 1,000 hours on it for unmatchable with hardly 400 hours on it. The difference of opinion in Price 'tween the two machines was upright complete $100,000 - and the principal offered to impart Viscount Nelson that amount of money interest-gratis 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)