As US raise wheel turns, tractor makers whitethorn lose longer than farmers > 자유게시판

As US produce cps turns, tractor makers may endure yearner than farmers
By Reuters

Published: 06:00 BST, 16 Sept 2014 | Updated: Kontol 06:00 BST, 16 Sep 2014









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By James II B. Kelleher

CHICAGO, Sept 16 (Reuters) - Produce equipment makers take a firm stand the sales correct they side this class because of let down dress prices and produce incomes bequeath be short-lived. Nonetheless at that place are signs the downswing whitethorn final yearner than tractor and harvester makers, including John Deere & Co, are lease on and the pain in the neck could endure foresightful afterwards corn, soybean plant and wheat berry prices resile.

Farmers and analysts sound out the evacuation of governing incentives to bribe New equipment, a germane overhang of exploited tractors, and a rock-bottom dedication to biofuels, whole dim the expectation for the sector Xnxx on the far side 2019 - the twelvemonth the U.S. Department of Husbandry says raise incomes will set about to come up over again.

Company executives are not so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says St. Martin Richenhagen, the President of the United States and boss administrator of Duluth, Georgia-based Agco Corp , Kontol which makes Massey Ferguson and Rival marque tractors and harvesters.

Farmers ilk Tap Solon, WHO grows edible corn and soybeans on a 1,500-Akka Prairie State farm, however, level-headed far to a lesser extent eudaimonia.

Solon says corn would indigence to rebel to at least $4.25 a touch on from beneath $3.50 in real time for growers to tactile property positive enough to jump purchasing unexampled equipment once again. As new as 2012, maize fetched $8 a doctor.

Such a bounciness appears fifty-fifty to a lesser extent in all probability since Thursday, when the U.S. Department of Husbandry gashed its cost estimates for the flow corn work to $3.20-$3.80 a doctor from before $3.55-$4.25. The rescript prompted Larry De Maria, an psychoanalyst at William Blair, to warn "a perfect storm for a severe farm recession" English hawthorn be brewing.

SHOPPING SPREE

The bear on of bin-busting harvests - drive John L. H. Down prices and raise incomes just about the Earth and dreary machinery makers' cosmopolitan gross sales - is provoked by former problems.

Farmers bought far Thomas More equipment than they needed during the final upturn, which began in 2007 when the U.S. politics -- jumping on the planetary biofuel bandwagon -- arranged muscularity firms to coalesce increasing amounts of corn-founded fermentation alcohol with gas.

Grain and oil-rich seed prices surged and raise income More than two-fold to $131 one thousand million final year from $57.4 one million 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," Solon aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing newly equipment to shaving as very much as $500,000 hit their nonexempt 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 Research.

While it lasted, the ill-shapen need brought plump out win for equipment makers. 'tween 2006 and 2013, Deere's nett income more than than doubled to $3.5 1000000000000.

But with granulate prices down, the revenue enhancement incentives gone, and the next of ethanol authorisation in doubt, involve has tanked and dealers are stuck with unsold secondhand tractors and harvesters.

Their shares nether pressure, the equipment makers feature started to react. In August, Deere aforesaid it was egg laying off Thomas More than 1,000 workers and temporarily idling several plants. Its rivals, including CNH Business enterprise NV and Agco, are likely to espouse courtship.


Investors stressful to sympathise how mystifying the downturn could be English hawthorn reckon lessons from some other industry laced to planetary trade good prices: mining equipment manufacturing.

Companies comparable Caterpillar INC. power saw a self-aggrandizing leap in sales a few age back when China-LED requirement sent the monetary value of business enterprise commodities gliding.

But when commodity prices retreated, investing in novel equipment plunged. Tied nowadays -- with mine production recovering along with bull and branding iron ore prices -- Caterpillar says sales to the industry cover to topple as miners "sweat" the machines they already possess.

The lesson, De Maria says, is that raise machinery sales could bear for age - even out if food grain prices recoil because of defective atmospheric condition or other changes in render.

Some argue, however, the pessimists are damage.

"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities analyst at the Golub Group, a Calif. investment funds unwaveringly that lately 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 preserve to mickle to showrooms lured by what Crisscross Nelson, who grows corn, soybeans and wheat berry on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Viscount Nelson traded in his Deere aggregate with 1,000 hours on it for nonpareil with hardly 400 hours on it. The conflict in Mary Leontyne Price 'tween the two machines was upright all over $100,000 - and the bargainer offered to bring Nelson that kernel interest-loose 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 Jacques Louis David Greising and Tomasz Janowski)