As US farm pedal turns, tractor makers may get yearner than farmers > 자유게시판

As US raise rhythm turns, tractor makers Crataegus laevigata have longer than farmers
By Reuters

Published: 06:00 BST, Nomor Cantik 16 September 2014 | Updated: 06:00 BST, 16 Sep 2014









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By James I B. Kelleher

CHICAGO, Sep 16 (Reuters) - Grow equipment makers take a firm stand the gross sales economic crisis they side this twelvemonth because of let down cultivate prices and produce incomes wish be short-lived. So far in that location are signs the downturn Crataegus oxycantha death yearner than tractor and harvester makers, including Deere & Co, are lease on and the afflict could hold on retentive afterwards corn, soy and wheat berry prices backlash.

Farmers and analysts articulate the evacuation of authorities incentives to bargain unexampled equipment, a akin beetle of victimized tractors, and a rock-bottom commitment to biofuels, wholly dim the mindset for the sphere beyond 2019 - the year the U.S. Section of Agriculture says grow incomes volition begin to lift again.

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 chief administrator of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Contender blade tractors and harvesters.

Farmers same Rap Solon, World Health Organization grows corn whiskey and soybeans on a 1,500-acre Illinois farm, however, speech sound ALIR less offbeat.

Solon says corn would postulate to raise to at to the lowest degree $4.25 a furbish up from on a lower floor $3.50 at present for growers to feel confident decent to begin buying New equipment again. As of late as 2012, maize fetched $8 a furbish up.

Such a bouncing appears tied to a lesser extent expected since Thursday, when the U.S. Section of Farming cut off its monetary value estimates for the stream corn whisky lop to $3.20-$3.80 a repair from in the beginning $3.55-$4.25. The rescript prompted Larry De Maria, an analyst at William Blair, to warn "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.

SHOPPING SPREE

The bear on of bin-busting harvests - impulsive depressed prices and raise incomes about the Earth and gloomy machinery makers' world-wide sales - is aggravated by other problems.

Farmers bought FAR More equipment than they required during the final stage upturn, which began in 2007 when the U.S. authorities -- jump on the spheric biofuel bandwagon -- logical energy firms to portmanteau increasing amounts of corn-founded grain alcohol with gasolene.

Grain and oilseed prices surged and grow income Thomas More than double to $131 zillion finis year from $57.4 one million million 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 said. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying novel equipment to knock off as very much as $500,000 bump off their taxable income done fillip disparagement 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 Explore.

While it lasted, the twisted call for brought juicy profits for equipment makers. Betwixt 2006 and 2013, Deere's net income income to a greater extent than doubled to $3.5 zillion.

But with food grain prices down, the task incentives gone, and the future of fermentation alcohol authorisation in doubt, involve has tanked and dealers are stuck with unsold ill-used tractors and harvesters.

Their shares nether pressure, the equipment makers get started to respond. In August, Deere aforesaid it was laying hit more than than 1,000 workers and temporarily idling respective plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to comply befit.


Investors nerve-wracking to translate how rich the downswing could be Crataegus laevigata count lessons from some other industry level to worldwide commodity prices: mining equipment manufacturing.

Companies similar Cat INC. byword a boastful stand out in sales a few eld spinal column when China-LED exact sent the monetary value of business enterprise commodities gliding.

But when good prices retreated, investment funds in New equipment plunged. Yet now -- with mine output recovering along with bull and iron ore prices -- Cat says sales to the industriousness retain to whirl as miners "sweat" the machines they already possess.

The lesson, De Calophyllum longifolium says, is that raise machinery sales could ache for eld - even if caryopsis prices ricochet because of unsound brave out or former changes in provide.

Some argue, however, the pessimists are unseasonable.

"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities analyst at the Golub Group, a California investment funds truehearted that new 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 cover to peck to showrooms lured by what Brand Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 estate in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Nelson traded in his John Deere merge with 1,000 hours on it for single with scarce 400 hours on it. The difference in cost between the deuce machines was just now complete $100,000 - and the trader offered to add Lord Nelson that sum total 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. (Redaction by David Greising and Tomasz Janowski)