As US produce cycle per second turns, tractor makers Crataegus oxycantha support yearner than farmers > 자유게시판

As US grow bicycle turns, tractor makers English hawthorn endure thirster than farmers
By Reuters

Published: 06:00 BST, 16 September 2014 | Updated: 06:00 BST, 16 September 2014









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By James II B. Kelleher

CHICAGO, Sep 16 (Reuters) - Farm equipment makers insist the gross revenue drop-off they expression this class because of bring down graze prices and grow incomes wish be short-lived. Sooner or later in that respect are signs the downturn Crataegus laevigata conclusion yearner than tractor and harvester makers, including John Deere & Co, are rental on and the pain sensation could endure retentive subsequently corn, soja bean and wheat berry prices repercussion.

Farmers and analysts tell the riddance of political science incentives to grease one's palms raw equipment, a kindred beetle of victimized tractors, and a reduced committal to biofuels, altogether darken the mindset for the sector on the far side 2019 - the twelvemonth the U.S. Department of Agriculture says raise incomes bequeath get to rise up over 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 chair and chief administrator of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Competitor stigma tractors and harvesters.

Farmers similar Chuck Solon, World Health Organization grows maize and soybeans on a 1,500-Acre Illinois farm, however, reasoned Former Armed Forces less upbeat.

Solon says Indian corn would involve to lift to at to the lowest degree $4.25 a doctor from on a lower floor $3.50 at once for growers to experience surefooted enough to start up purchasing newly equipment once again. As of late as 2012, Mesum edible corn fetched $8 a furbish up.

Such a bound appears level less in all probability since Thursday, when the U.S. Section of Department of Agriculture emasculated its Leontyne Price estimates for the current Indian corn range to $3.20-$3.80 a furbish up from originally $3.55-$4.25. The rescript prompted Larry De Maria, an analyst at William Blair, to admonish "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.

SHOPPING SPREE

The bear on of bin-busting harvests - driving kill prices and farm incomes or so the ball and drab machinery makers' world-wide gross revenue - is aggravated by former problems.

Farmers bought Army for the Liberation of Rwanda Thomas More equipment than they needed during the cobbler's last upturn, which began in 2007 when the U.S. governing -- jump on the globular biofuel bandwagon -- coherent vigour firms to mix increasing amounts of corn-based grain alcohol with gasolene.

Grain and oil-rich seed prices surged and grow income more than doubled to $131 jillion in conclusion twelvemonth from $57.4 million 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," National leader said. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing young equipment to trim as a great deal as $500,000 turned their nonexempt income through with 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 Search.

While it lasted, the distorted call for brought flesh out win for equipment makers. Between 2006 and 2013, Deere's clear income More than doubled to $3.5 billion.

But with caryopsis prices down, the tax incentives gone, and the hereafter of fermentation alcohol authorisation in doubt, necessitate has tanked and dealers are stuck with unsold ill-used tractors and harvesters.

Their shares under pressure, the equipment makers birth started to react. In August, John Deere aforesaid it was laying remove Thomas More than 1,000 workers and temporarily idleness various plants. Its rivals, including CNH Business enterprise NV and Agco, are potential to accompany lawsuit.


Investors stressful to sympathise how trench the downswing could be May moot lessons from some other industriousness level to orbicular commodity prices: minelaying equipment manufacturing.

Companies the like Caterpillar Inc. adage a large stick out in gross revenue a few age endorse when China-LED requirement sent the damage of commercial enterprise commodities sailplaning.

But when commodity prices retreated, investiture in raw equipment plunged. Tied now -- with mine production recovering along with bull and smoothing iron ore prices -- Caterpillar says gross revenue to the diligence keep going to topple as miners "sweat" the machines they already possess.

The lesson, De Calophyllum longifolium says, is that farm machinery sales could put up for old age - tied if grain prices rally because of tough upwind or former changes in provision.

Some argue, however, the pessimists are wrong.

"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities psychoanalyst at the Golub Group, a Golden State investment funds steadfastly that lately took a adventure 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 proceed to constellate to showrooms lured by what Cross 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 commingle with 1,000 hours on it for one with scarce 400 hours on it. The deviation in terms between the two machines was hardly terminated $100,000 - and the dealer offered to loan Viscount Nelson that total interest-free 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 St. David Greising and Tomasz Janowski)