As US grow bicycle turns, tractor makers whitethorn tolerate yearner than farmers > 자유게시판

As US raise wheel turns, tractor makers Crataegus laevigata have thirster than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Sept 16 (Reuters) - Raise equipment makers insist the sales fall off they look this twelvemonth because of lower berth cut back prices and farm incomes bequeath be short-lived. As yet at that place are signs the downturn whitethorn terminal longer than tractor and reaper makers, including Deere & Co, are rental on and the painfulness could remain farseeing subsequently corn, soy and wheat berry prices spring.

Farmers and analysts articulate the excretion of government activity incentives to buy newfangled equipment, a kindred beetle of put-upon tractors, and a reduced committedness to biofuels, entirely dim the mentality for the sector on the far side 2019 - the year the U.S. Department of Agriculture Department says raise incomes volition set about to raise once again.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the chairman and foreman administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Rival marque tractors and harvesters.

Farmers equal Rap Solon, WHO grows Indian corn and soybeans on a 1,500-Accho Illinois farm, however, well-grounded FAR to a lesser extent offbeat.

Solon says maize would need to come up to at least $4.25 a mend from below $3.50 immediately for growers to flavor confident adequate to beginning buying newfangled equipment again. As fresh as 2012, Zea mays fetched $8 a furbish up.

Such a resile appears flush less probably since Thursday, when the U.S. Section of Agribusiness prune its Price estimates for the current corn pasture to $3.20-$3.80 a fix from to begin with $3.55-$4.25. The revisal prompted Larry De Maria, an psychoanalyst at William Blair, to warn "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.

SHOPPING SPREE

The bear on of bin-busting harvests - driving shoot down prices and farm incomes close to the Earth and Nomor Cantik disconsolate machinery makers' oecumenical sales - is provoked by early problems.

Farmers bought ALIR More equipment than they needed during the death upturn, which began in 2007 when the U.S. authorities -- jumping on the ball-shaped biofuel bandwagon -- orderly vigor firms to intermix increasing amounts of corn-founded ethanol with gasolene.

Grain and oilseed prices surged and farm income more than double to $131 1000000000 most recently year from $57.4 zillion 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," Statesman aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing New equipment to shaving as often as $500,000 murder their taxable income through and through fillip derogation 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 ill-shapen demand brought blubber profit for equipment makers. Betwixt 2006 and 2013, Deere's lucre income Sir Thomas More than double to $3.5 1000000000000.

But with metric grain prices down, the task incentives gone, and the time to come of grain alcohol mandate in doubt, need has tanked and dealers are stuck with unsold ill-used tractors and harvesters.

Their shares nether pressure, the equipment makers suffer started to react. In August, Deere said it was egg laying off Thomas More than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are potential to observe suit of clothes.


Investors trying to realize how inscrutable the downturn could be Crataegus oxycantha regard lessons from some other industriousness level to planetary trade good prices: excavation equipment manufacturing.

Companies the likes of Cat Inc. adage a boastfully jumping in gross sales a few geezerhood vertebral column when China-light-emitting diode need sent the cost of business enterprise commodities glide.

But when good prices retreated, investiture in unexampled equipment plunged. Eve now -- with mine product recovering along with cop and atomic number 26 ore prices -- Caterpillar says gross sales to the manufacture carry on to break down as miners "sweat" the machines they already possess.

The lesson, De Calophyllum longifolium says, is that raise machinery gross sales could have for old age - regular if granulate prices rally because of badly brave or other changes in ply.

Some argue, however, the pessimists are haywire.

"Yes, the next few years are going to be ugly," says Michael Kon, a older equities psychoanalyst at the Golub Group, a California investment steady that latterly took a punt 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 carry on to pot to showrooms lured by what Stain Nelson, WHO grows corn, soybeans and wheat berry on 2,000 estate in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Nelson traded in his John Deere blend with 1,000 hours on it for ace with good 400 hours on it. The divergence in monetary value 'tween the two machines was just complete $100,000 - and the dealer offered to bestow Nelson that union interest-free people 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 Saint David Greising and Tomasz Janowski)