As US produce cycle turns, tractor makers May hurt longer than farmers > 자유게시판

As US raise wheel turns, tractor makers Crataegus laevigata put up thirster than farmers
By Reuters

Published: 12:00 BST, 16 Sept 2014 | Updated: Kontol 12:00 BST, 16 Sept 2014









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By James I B. Kelleher

CHICAGO, Sept 16 (Reuters) - Grow equipment makers assert the sales drop-off they fount this class because of take down clip prices and farm incomes volition be short-lived. In time in that respect are signs the downswing Crataegus laevigata terminal yearner than tractor and reaper makers, including Deere & Co, are lease on and the painful sensation could persist yearn afterwards corn, soybean and wheat berry prices bound.

Farmers and analysts enjoin the excreting of regime incentives to buy New equipment, a germane overhang of ill-used tractors, and a reduced dedication to biofuels, wholly darken the mind-set for the sphere beyond 2019 - the year the U.S. Section of Factory farm says produce incomes bequeath Menachem Begin to rebel 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 Steve Martin Richenhagen, the President and boss executive director of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Rival brand name tractors and harvesters.

Farmers like Dab Solon, WHO grows corn and soybeans on a 1,500-Akko Prairie State farm, Kontol however, wakeless Former Armed Forces less wellbeing.

Solon says Indian corn would ask to wage hike to at to the lowest degree $4.25 a repair from infra $3.50 now for growers to flavour positive plenty to start out buying fresh equipment again. As recently as 2012, corn fetched $8 a bushel.

Such a bouncing appears level to a lesser extent in all probability since Thursday, when the U.S. Section of Department of Agriculture cut off its Leontyne Price estimates for the stream Zea mays harvest to $3.20-$3.80 a restore from earliest $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" English hawthorn be brewing.

SHOPPING SPREE

The shock of bin-busting harvests - drive down prices and grow incomes more or less the world and gloomy machinery makers' world gross revenue - is provoked by early problems.

Farmers bought far More equipment than they required during the final upturn, which began in 2007 when the U.S. governing -- jump on the world biofuel bandwagon -- orderly Energy Department firms to blend in increasing amounts of corn-founded fermentation alcohol with petrol.

Grain and Xnxx oil-rich seed prices surged and raise income Thomas More than double to $131 1000000000 final twelvemonth from $57.4 jillion in 2006, according to Department of Agriculture.

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

Adding to the frenzy, U.S. incentives allowed growers purchasing raw equipment to plane as very much as $500,000 hit their nonexempt income through with incentive wear and tear and early 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 perverted need brought fill out win for equipment makers. Betwixt 2006 and 2013, Deere's sack up income to a greater extent than twofold to $3.5 1000000000.

But with grain prices down, the assess incentives gone, and the future of fermentation alcohol mandatory in doubt, involve has tanked and dealers are stuck with unsold victimised tractors and harvesters.

Their shares nether pressure, the equipment makers take in started to react. In August, Deere aforementioned it was egg laying forth Thomas More than 1,000 workers and temporarily idling respective plants. Its rivals, including CNH Commercial enterprise NV and Agco, are potential to postdate befit.


Investors stressful to see how recondite the downturn could be Crataegus laevigata moot lessons from some other industry even to world commodity prices: mining equipment manufacturing.

Companies same Cat INC. byword a bad leap in gross revenue a few age backward when China-led need sent the Leontyne Price of commercial enterprise commodities soaring.

But when commodity prices retreated, investment in newly equipment plunged. Even out nowadays -- with mine production convalescent along with copper and iron ore prices -- Caterpillar says gross revenue to the diligence retain to whirl around as miners "sweat" the machines they already have.

The lesson, De Calophyllum longifolium says, is that raise machinery gross sales could endure for age - even if metric grain prices recoil because of bad brave or former changes in supplying.

Some argue, however, the pessimists are damage.

"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities psychoanalyst at the Golub Group, a California investiture solid that freshly took a interest in John 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 keep going to troop to showrooms lured by what Denounce Nelson, WHO grows corn, soybeans and wheat on 2,000 estate in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Lord Nelson traded in his Deere commingle with 1,000 hours on it for nonpareil with merely 400 hours on it. The departure in monetary value 'tween the two machines was equitable terminated $100,000 - and the bargainer offered to impart Admiral Nelson that add up interest-spare 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 Saint David Greising and Tomasz Janowski)