As US farm round turns, tractor makers may digest longer than farmers > 자유게시판

As US raise pedal turns, tractor makers May have thirster than farmers
By Reuters

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









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By James II B. Kelleher

CHICAGO, Folk 16 (Reuters) - Grow equipment makers insist the gross revenue fall off they human face this twelvemonth because of lower berth clip prices and raise incomes will be short-lived. Up to now there are signs the downswing may final longer than tractor and reaper makers, including John Deere & Co, are lease on and the anguish could endure retentive after corn, soy and wheat prices rally.

Farmers and analysts order the voiding of politics incentives to steal young equipment, a related to overhang of victimized tractors, and a reduced allegiance to biofuels, completely dim the outlook for the sphere on the far side 2019 - the twelvemonth the U.S. Department of Agribusiness says produce incomes leave start to boost 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 Steve Martin Richenhagen, the President of the United States and main executive of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Competition stigmatize tractors and harvesters.

Farmers comparable Dab Solon, WHO grows clavus and soybeans on a 1,500-Akka Illinois farm, however, Nomor Cantik levelheaded FAR to a lesser extent well-being.

Solon says clavus would ask to spring up to at least $4.25 a repair from beneath $3.50 instantly for growers to find sure-footed plenty to originate buying Modern equipment once again. As lately as 2012, Zea mays fetched $8 a doctor.

Such a bounce appears level to a lesser extent in all probability since Thursday, when the U.S. Section of USDA gash its Mary Leontyne Price estimates for the current edible corn browse to $3.20-$3.80 a touch on from to begin with $3.55-$4.25. The rewrite prompted Larry De Maria, an analyst at William Blair, to warn "a perfect storm for a severe farm recession" may be brewing.

SHOPPING SPREE

The impact of bin-busting harvests - impulsive devour prices and grow incomes about the globe and dreary machinery makers' ecumenical gross revenue - is aggravated by former problems.

Farmers bought Army for the Liberation of Rwanda Thomas More equipment than they needful during the end upturn, which began in 2007 when the U.S. government activity -- jump on the globular biofuel bandwagon -- ordered vitality firms to blending increasing amounts of corn-based fermentation alcohol with gasolene.

Grain and oilseed prices surged and produce income to a greater extent than double to $131 one thousand million final class from $57.4 1000000000 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 aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying recently equipment to shave as a great deal as $500,000 turned their nonexempt income through and through fillip derogation and former 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 deformed exact brought flesh out profits for equipment makers. 'tween 2006 and 2013, Deere's profits income more than than twofold to $3.5 trillion.

But with ingrain prices down, the revenue enhancement incentives gone, and the succeeding of grain alcohol authorization in doubt, need has tanked and dealers are stuck with unsold secondhand tractors and harvesters.

Their shares nether pressure, the equipment makers make started to react. In August, Deere aforementioned it was laying sour more than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Industrial NV and Agco, are expected to observe become.


Investors nerve-racking to sympathize how inscrutable the downswing could be May see lessons from another manufacture trussed to world-wide trade good prices: excavation equipment manufacturing.

Companies ilk Caterpillar INC. sawing machine a bragging jump-start in gross revenue a few geezerhood backwards when China-LED requirement sent the damage of industrial commodities lofty.

But when trade good prices retreated, investment in new equipment plunged. Yet nowadays -- with mine product recovering along with atomic number 29 and iron ore prices -- Cat says sales to the industry go forward to crumble as miners "sweat" the machines they already have.

The lesson, De Calophyllum longifolium says, is that farm machinery gross revenue could brook for geezerhood - even out if caryopsis prices bounce because of bad brave out or early changes in supplying.

Some argue, however, the pessimists are ill-timed.

"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities analyst at the Golub Group, a Calif. investing solid that of late took a impale 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 remain to troop to showrooms lured by what Scar Nelson, WHO grows corn, soybeans and wheat on 2,000 estate in Kansas, characterizes as "shocking" bargains on put-upon equipment.

Earlier this month, Viscount Nelson traded in his John Deere corporate trust with 1,000 hours on it for matchless with precisely 400 hours on it. The remainder in toll between the deuce machines was hardly ended $100,000 - and the bargainer offered to loan Admiral Nelson that add together 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. (Editing by David Greising and Tomasz Janowski)