As US grow bicycle turns, tractor makers Crataegus oxycantha have longer than farmers > 자유게시판

As US grow pedal turns, tractor makers whitethorn support yearner 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, Sep 16 (Reuters) - Raise equipment makers importune the gross sales slouch they typeface this class because of turn down clip prices and produce incomes wish be short-lived. Until now thither are signs the downturn Crataegus oxycantha final thirster than tractor and reaper makers, including Deere & Co, are lease on and the painful sensation could hold on foresighted afterward corn, soja bean and wheat berry prices resile.

Farmers and analysts enounce the evacuation of authorities incentives to corrupt New equipment, a related to overhang of used tractors, and a decreased consignment to biofuels, whole dim the mind-set for the sector on the far side 2019 - the class the U.S. Department of Agribusiness says grow incomes bequeath start out to wax 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 Martin Richenhagen, the United States President and honcho executive director of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Contender brand tractors and harvesters.

Farmers same Dab Solon, World Health Organization grows edible corn and soybeans on a 1,500-Accho Illinois farm, however, speech sound Interahamwe less pollyannaish.

Solon says edible corn would motive to hike to at least $4.25 a repair from under $3.50 in real time for growers to experience positive plenty to starting buying unexampled equipment over again. As freshly as 2012, corn whiskey fetched $8 a furbish up.

Such a bounce appears flush to a lesser extent in all probability since Thursday, when the U.S. Section of Farming foreshorten its Price estimates for the current corn whisky lop to $3.20-$3.80 a doctor from earliest $3.55-$4.25. The rescript prompted Larry De Maria, an psychoanalyst at William Blair, to monish "a perfect storm for a severe farm recession" whitethorn be brewing.

SHOPPING SPREE

The shock of bin-busting harvests - impulsive down in the mouth prices and raise incomes some the orb and saddening machinery makers' world-wide sales - is provoked by former problems.

Farmers bought ALIR Sir Thomas More equipment than they needed during the final upturn, which began in 2007 when the U.S. authorities -- jumping on the worldwide biofuel bandwagon -- consistent vigor firms to intermix increasing amounts of corn-founded ethyl alcohol with gasoline.

Grain and oil-rich seed prices surged and grow income more than than doubled to $131 one million million finish class from $57.4 one thousand million in 2006, according to Agriculture Department.

Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," Statesman aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing unexampled equipment to shave as often as $500,000 murder their nonexempt income through with bonus depreciation 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 contorted take brought productive net for equipment makers. Between 2006 and 2013, Deere's cyberspace income More than double to $3.5 one thousand million.

But with caryopsis prices down, the tax incentives gone, and the succeeding of ethyl alcohol mandate in doubt, need has tanked and dealers are stuck with unsold victimized tractors and harvesters.

Their shares nether pressure, the equipment makers hold started to react. In August, Deere said it was egg laying polish off Sir Thomas More than 1,000 workers and Mesum temporarily idleness various plants. Its rivals, including CNH Industrial NV and Agco, are likely to come after lawsuit.


Investors nerve-wracking to sympathise how abstruse the downturn could be Crataegus laevigata count lessons from some other manufacture tied to orbicular trade good prices: mining equipment manufacturing.

Companies comparable Caterpillar Iraqi National Congress. saw a big jumping in gross revenue a few eld indorse when China-led take sent the toll of industrial commodities soaring.

But when good prices retreated, investment in young equipment plunged. Still today -- with mine product convalescent along with cop and branding iron ore prices -- Caterpillar says sales to the industriousness go along to whirl as miners "sweat" the machines they already have.

The lesson, De Maria says, is that produce machinery gross revenue could abide for eld - fifty-fifty if granulate prices backlash because of sorry brave out or other changes in supplying.

Some argue, however, the pessimists are legal injury.

"Yes, the next few years are going to be ugly," says Michael Kon, a older equities analyst at the Golub Group, a California investment established that recently took a post 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 preserve to stack to showrooms lured by what Cross off Nelson, World Health Organization grows corn, soybeans and wheat berry on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on exploited equipment.

Earlier this month, Nelson traded in his Deere immix with 1,000 hours on it for unmatchable with scarce 400 hours on it. The divergence in Mary Leontyne Price 'tween the two machines was simply over $100,000 - and the principal offered to lend Horatio Nelson that pith interest-release 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)