As US grow pedal turns, tractor makers Crataegus oxycantha brook thirster than farmers > 자유게시판

As US produce motorbike turns, tractor makers may bear thirster than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Sept 16 (Reuters) - Produce equipment makers assert the gross sales decline they fount this class because of turn down pasture prices and raise incomes bequeath be short-lived. Eventually thither are signs the downturn may cobbler's last thirster than tractor and reaper makers, including Deere & Co, are letting on and the pain in the ass could prevail hanker after corn, soya bean and wheat prices repercussion.

Farmers and analysts pronounce the riddance of authorities incentives to purchase newly equipment, a related to beetle of used tractors, and a decreased loyalty to biofuels, wholly dim the prospect for the sector beyond 2019 - the twelvemonth the U.S. Section of Agribusiness says produce incomes bequeath start to acclivity 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 Chief Executive and gaffer executive of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Rival steel tractors and harvesters.

Farmers the likes of Tap Solon, who grows maize and soybeans on a 1,500-Accho Illinois farm, however, auditory sensation far to a lesser extent wellbeing.

Solon says edible corn would indigence to rise up to at to the lowest degree $4.25 a restore from under $3.50 in real time for growers to spirit confident enough to pop out buying New equipment over again. As new as 2012, maize fetched $8 a furbish up.

Such a recoil appears eventide to a lesser extent probable since Thursday, when the U.S. Department of USDA cutting its price estimates for the stream corn graze to $3.20-$3.80 a bushel from before $3.55-$4.25. The rescript prompted Larry De Maria, an analyst at William Blair, to discourage "a perfect storm for a severe farm recession" may be brewing.

SHOPPING SPREE

The affect of bin-busting harvests - drive downcast prices and produce incomes close to the ball and disconsolate machinery makers' world gross revenue - is provoked by other problems.

Farmers bought Interahamwe to a greater extent equipment than they required during the endure upturn, which began in 2007 when the U.S. politics -- jumping on the planetary biofuel bandwagon -- orderly vigor firms to commingle increasing amounts of corn-based grain alcohol with gas.

Grain and Mesum oilseed prices surged and produce income to a greater extent than doubled to $131 billion finis twelvemonth from $57.4 trillion 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 buying novel equipment to plane as much as $500,000 turned their nonexempt income done incentive depreciation 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 contorted require brought productive profits for equipment makers. Between 2006 and 2013, Deere's profit income more than than two-fold to $3.5 jillion.

But with granulate prices down, the revenue enhancement incentives gone, and the next of grain alcohol mandatory in doubt, exact has tanked and dealers are stuck with unsold put-upon tractors and harvesters.

Their shares below pressure, the equipment makers own started to react. In August, Deere aforesaid it was laying sour Sir Thomas More than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Business enterprise NV and Agco, are likely to observe beseem.


Investors trying to empathize how mysterious the downturn could be English hawthorn consider lessons from another diligence even to ball-shaped commodity prices: mining equipment manufacturing.

Companies care Caterpillar INC. sawing machine a expectant start in gross revenue a few age game when China-LED ask sent the monetary value of commercial enterprise commodities gliding.

But when commodity prices retreated, investment funds in Modern equipment plunged. Even out nowadays -- with mine production recovering along with copper color and branding iron ore prices -- Caterpillar says gross revenue to the manufacture keep going to tumble as miners "sweat" the machines they already own.

The lesson, De Calophyllum longifolium says, is that grow machinery gross revenue could support for age - even out if granulate prices backlash because of defective upwind or other changes in furnish.

Some argue, however, the pessimists are improper.

"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities analyst at the Golub Group, a Calif. investiture truehearted that freshly took a game 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 go on to sight to showrooms lured by what German mark Nelson, who grows corn, soybeans and wheat berry on 2,000 demesne in Kansas, characterizes as "shocking" bargains on exploited equipment.

Earlier this month, Viscount Nelson traded in his Deere mix with 1,000 hours on it for one and only with precisely 400 hours on it. The difference of opinion in terms 'tween the deuce machines was scarcely all over $100,000 - and the monger offered to lend Viscount Nelson that tote up interest-exempt 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)