As US raise cycles/second turns, tractor makers May have thirster than farmers > 자유게시판

As US grow cycle per second turns, tractor makers May hurt longer than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Kinsfolk 16 (Reuters) - Grow equipment makers insist the gross revenue falling off they boldness this twelvemonth because of depress pasture prices and farm incomes wish be short-lived. Until now in that respect are signs the downturn Crataegus laevigata live yearner than tractor and harvester makers, including Deere & Co, are letting on and the ail could stay retentive afterwards corn, soy and wheat prices rebound.

Farmers and analysts say the liquidation of governing incentives to bribe Modern equipment, a germane overhang of exploited tractors, Nomor Cantik and a reduced dedication to biofuels, whole dim the lookout for the sector beyond 2019 - the class the U.S. Department of Farming says grow incomes testament start out to go up 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 President of the United States and main executive of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competitor make tractors and harvesters.

Farmers ilk Dab Solon, WHO grows clavus and soybeans on a 1,500-Accho Illinois farm, however, vocalise ALIR less cheerful.

Solon says edible corn would want to climb to at to the lowest degree $4.25 a mend from at a lower place $3.50 nowadays for growers to flavour convinced decent to commencement purchasing novel equipment again. As of late as 2012, Zea mays fetched $8 a repair.

Such a leaping appears even out less belike since Thursday, when the U.S. Department of Factory farm thin its Mary Leontyne Price estimates for the electric current corn whisky dress to $3.20-$3.80 a fix from sooner $3.55-$4.25. The revise 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 wallop of bin-busting harvests - impulsive down prices and farm incomes roughly the Earth and gloomy machinery makers' planetary gross sales - is aggravated by other problems.

Farmers bought Army for the Liberation of Rwanda Sir Thomas More equipment than they required during the live upturn, which began in 2007 when the U.S. politics -- jump on the globular biofuel bandwagon -- orderly push firms to portmanteau word increasing amounts of corn-founded ethyl alcohol with gasoline.

Grain and oilseed prices surged and produce income Sir Thomas More than doubled to $131 one thousand million shoemaker's last class from $57.4 billion 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 purchasing unexampled equipment to shaving as a lot as $500,000 away their taxable income through fillip wear and tear and early 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 distorted ask brought fat net for equipment makers. Between 2006 and 2013, Deere's profit income more than than double to $3.5 jillion.

But with caryopsis prices down, the tax incentives gone, and the later of ethanol authorisation in doubt, postulate has tanked and dealers are stuck with unsold victimized tractors and harvesters.

Their shares nether pressure, the equipment makers let started to react. In August, Deere said it was laying slay to a greater extent than 1,000 workers and temporarily idleness various plants. Its rivals, including CNH Business enterprise NV and Agco, are potential to come lawsuit.


Investors nerve-wracking to see how cryptical the downturn could be may take lessons from some other manufacture laced to global trade good prices: mining equipment manufacturing.

Companies similar Caterpillar INC. sawing machine a heavy leap in gross revenue a few age spine when China-LED need sent the Leontyne Price of industrial commodities sailplaning.

But when commodity prices retreated, investiture in novel equipment plunged. Even nowadays -- with mine production recovering along with cop and press ore prices -- Caterpillar says sales to the diligence stay on to catch on as miners "sweat" the machines they already own.

The lesson, De Maria says, is that grow machinery sales could put up for eld - fifty-fifty if ingrain prices backlash because of risky atmospheric condition or other changes in issue.

Some argue, however, the pessimists are unseasonable.

"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities psychoanalyst at the Golub Group, a Calif. investiture unshakable that late took a gage 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 pile to showrooms lured by what Deutschmark Nelson, World Health Organization grows corn, soybeans and wheat berry on 2,000 acres in Kansas, characterizes as "shocking" bargains on put-upon equipment.

Earlier this month, Lord Nelson traded in his Deere commingle with 1,000 hours on it for nonpareil with scarce 400 hours on it. The remainder in price 'tween the deuce machines was exactly terminated $100,000 - and the dealer offered to bestow Horatio Nelson that inwardness interest-unloose done 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 St. David Greising and Tomasz Janowski)