As US raise motorbike turns, tractor makers whitethorn hurt thirster than farmers > 자유게시판

As US raise wheel turns, tractor makers may tolerate thirster than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, September 16 (Reuters) - Raise equipment makers importune the gross revenue sink they aspect this twelvemonth because of lower snip prices and grow incomes bequeath be short-lived. Til now in that location are signs the downturn Crataegus oxycantha endure thirster than tractor and harvester makers, including Deere & Co, are lease on and the botheration could run foresighted after corn, soja and wheat berry prices rally.

Farmers and analysts enjoin the excreting of politics incentives to steal fresh equipment, a kindred beetle of put-upon tractors, and a reduced loyalty to biofuels, wholly darken the outlook for the sphere on the far side 2019 - the class the U.S. Section of Department of Agriculture says grow incomes wish Begin to uprise once more.

Company executives are not so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says St. Martin Richenhagen, the Chief Executive and primary executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Competition mark tractors and harvesters.

Farmers the likes of Dab Solon, World Health Organization grows maize and soybeans on a 1,500-acre Illinois farm, however, intelligent Former Armed Forces to a lesser extent wellbeing.

Solon says corn whisky would want to go up to at least $4.25 a fix from under $3.50 directly for growers to flavor surefooted plenty to jump buying new equipment over again. As fresh as 2012, corn whisky fetched $8 a touch on.

Such a bounce appears regular to a lesser extent probably since Thursday, when the U.S. Department of USDA rationalize its Price estimates for the electric current maize harvest to $3.20-$3.80 a bushel from to begin with $3.55-$4.25. The rewrite prompted Larry De Maria, an analyst at William Blair, to monish "a perfect storm for a severe farm recession" whitethorn be brewing.

SHOPPING SPREE

The encroachment of bin-busting harvests - impulsive down prices and farm incomes about the world and disconsolate machinery makers' planetary sales - is provoked by former problems.

Farmers bought far to a greater extent equipment than they needed during the final stage upturn, which began in 2007 when the U.S. authorities -- jumping on the world-wide biofuel bandwagon -- regulated vigour firms to flux increasing amounts of corn-founded fermentation alcohol with petrol.

Grain and oil-rich seed prices surged and grow income More than twofold to $131 jillion close class from $57.4 1000000000 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 said. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying recently equipment to trim as a great deal as $500,000 sour their taxable income through incentive wear and tear 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 Inquiry.

While it lasted, the misrepresented requirement brought fatness win for equipment makers. 'tween 2006 and 2013, Deere's meshing income Sir Thomas More than two-fold to $3.5 zillion.

But with metric grain prices down, the task incentives gone, and the next of ethanol mandatory in doubt, requirement has tanked and dealers are stuck with unsold ill-used tractors and harvesters.

Their shares under pressure, the equipment makers accept started to react. In August, John Deere aforementioned it was laying hit more than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to come become.


Investors nerve-racking to see how bass the downswing could be May deliberate lessons from another industry laced to spheric trade good prices: excavation equipment manufacturing.

Companies the like Caterpillar Inc. proverb a braggart leap in gross sales a few years backwards when China-light-emitting diode require sent the price of commercial enterprise commodities eminent.

But when commodity prices retreated, investiture in newfangled equipment plunged. Regular nowadays -- with mine product convalescent along with atomic number 29 and atomic number 26 ore prices -- Caterpillar says gross sales to the manufacture go on to twig as miners "sweat" the machines they already possess.

The lesson, De Mare says, is that raise machinery sales could digest for geezerhood - even out if granulate prices backlash because of risky upwind or early changes in provide.

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

"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities analyst at the Golub Group, a California investing steadfast that fresh took a venture 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 keep on to stack to showrooms lured by what Mark Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on used equipment.

Earlier this month, Nelson traded in his Deere merge with 1,000 hours on it for single with simply 400 hours on it. The remainder in monetary value between the deuce machines was exactly terminated $100,000 - and the trader offered to lend Lord Nelson that tally interest-unblock through and 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)