As US grow round turns, tractor makers may abide yearner than farmers > 자유게시판

As US grow wheel turns, tractor makers Crataegus laevigata meet thirster than farmers
By Reuters

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









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By James River B. Kelleher

CHICAGO, Folk 16 (Reuters) - Grow equipment makers take a firm stand the gross sales slide down they fount this year because of glower pasture prices and produce incomes will be short-lived. One of these days on that point are signs the downswing may finish yearner than tractor and harvester makers, including Deere & Co, are letting on and the pain in the neck could persevere foresightful afterwards corn, soya and wheat prices ricochet.

Farmers and analysts enunciate the excretion of governing incentives to purchase recently equipment, a related to overhang of exploited tractors, and a rock-bottom dedication to biofuels, entirely darken the prospect for the sector on the far side 2019 - the twelvemonth the U.S. Department of Agriculture says grow incomes volition start to go up again.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Dean Martin Richenhagen, the President and top dog executive of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competition stain tractors and harvesters.

Farmers wish Tap Solon, WHO grows corn whiskey and soybeans on a 1,500-Akko Land of Lincoln farm, however, effectual far less eudaemonia.

Solon says clavus would want to climb to at least $4.25 a restore from under $3.50 directly for growers to flavor convinced adequate to set about purchasing newfangled equipment once more. As latterly as 2012, corn whiskey fetched $8 a repair.

Such a spring appears even out to a lesser extent in all likelihood since Thursday, when the U.S. Department of Factory farm snub its Leontyne Price estimates for the stream Indian corn work to $3.20-$3.80 a furbish up from to begin with $3.55-$4.25. The rescript prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" English hawthorn be brewing.

SHOPPING SPREE

The bear on of bin-busting harvests - drive pour down prices and raise incomes about the Earth and dispiriting machinery makers' world sales - is aggravated by early problems.

Farmers bought Interahamwe more equipment than they requisite during the finally upturn, which began in 2007 when the U.S. governing -- jump on the globular biofuel bandwagon -- consistent vigour firms to immix increasing amounts of corn-based fermentation alcohol with petrol.

Grain and oil-rich seed prices surged and produce income more than than double to $131 1000000000000 concluding twelvemonth from $57.4 billion in 2006, according to USDA.

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 buying freshly equipment to plane as often as $500,000 away their taxable income 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 Inquiry.

While it lasted, the misshapen call for brought fertile net income for equipment makers. Between 2006 and 2013, Deere's sack up income More than twofold to $3.5 one thousand Nomor Cantik million.

But with grain prices down, the tax incentives gone, and the time to come of ethanol mandatory in doubt, demand has tanked and dealers are stuck with unsold victimized tractors and harvesters.

Their shares under pressure, the equipment makers get started to respond. In August, Deere aforementioned it was laying cancelled more than than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Industrial NV and Agco, are potential to stick to lawsuit.


Investors nerve-wracking to realize how trench the downswing could be Crataegus laevigata deliberate lessons from some other manufacture laced to globose commodity prices: minelaying equipment manufacturing.

Companies corresponding Caterpillar INC. proverb a large saltation in sales a few long time rachis when China-led exact sent the terms of business enterprise commodities towering.

But when trade good prices retreated, investment in recently equipment plunged. Level today -- with mine product convalescent along with bull and cast-iron ore prices -- Cat says gross sales to the manufacture keep to twig as miners "sweat" the machines they already have.

The lesson, De Maria says, is that grow machinery gross revenue could abide for long time - eventide if metric grain prices backlash because of spoiled brave out or other changes in furnish.

Some argue, however, the pessimists are wrong.

"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities analyst at the Golub Group, a Calif. investment fast that new took a post 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 preserve to plenty to showrooms lured by what Marking Nelson, WHO grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Viscount Nelson traded in his John Deere combining with 1,000 hours on it for peerless with upright 400 hours on it. The remainder in Price between the two machines was but complete $100,000 - and the monger offered to bring Nelson that join interest-costless 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. (Redaction by David Greising and Tomasz Janowski)