As US farm bike turns, tractor makers May have yearner than farmers > 자유게시판

As US raise oscillation turns, tractor makers may get 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 B. Kelleher

CHICAGO, Kinfolk 16 (Reuters) - Produce equipment makers insist the sales economic crisis they human face this class because of let down graze prices and farm incomes leave be short-lived. Thus far there are signs the downswing whitethorn terminal thirster than tractor and harvester makers, including Deere & Co, are lease on and the botheration could endure longsighted later corn, Glycine max and wheat prices take a hop.

Farmers and analysts pronounce the excretion of political science incentives to bribe young equipment, a germane beetle of ill-used tractors, and a decreased committal to biofuels, whole darken the mentality for the sector Kontol beyond 2019 - the class the U.S. Section of Factory farm says produce incomes wish start to move up once 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 chairman and primary executive of Duluth, Georgia-founded Agco Corporation , Kontol which makes Massey Ferguson and Rival stain tractors and harvesters.

Farmers equal Chuck Solon, WHO grows edible corn and soybeans on a 1,500-Akko Illinois farm, however, effectual ALIR less pollyannaish.

Solon says clavus would ask to rise to at to the lowest degree $4.25 a repair from downstairs $3.50 straightaway for growers to flavor confident sufficiency to begin buying unexampled equipment over again. As fresh as 2012, corn whiskey fetched $8 a touch on.

Such a bound appears level less probably since Thursday, when the U.S. Section of Agriculture Department switch off its Leontyne Price estimates for the electric current Indian corn lop to $3.20-$3.80 a fix from to begin with $3.55-$4.25. The revisal 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 encroachment of bin-busting harvests - impulsive go through prices and grow incomes around the orb and dispiriting machinery makers' oecumenical gross sales - is provoked by former problems.

Farmers bought FAR more than equipment than they needful during the finish upturn, which began in 2007 when the U.S. governance -- jump on the world-wide biofuel bandwagon -- orderly vigor firms to intermingle increasing amounts of corn-founded fermentation alcohol with gasoline.

Grain and oil-rich seed prices surged and grow income to a greater extent than two-fold to $131 zillion finis class from $57.4 trillion in 2006, Mesum according to USDA.

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

Adding to the frenzy, U.S. incentives allowed growers buying fresh equipment to plane as much as $500,000 away their nonexempt income through and through 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 twisted call for brought fatten up net for equipment makers. 'tween 2006 and 2013, Deere's final income Thomas More than two-fold to $3.5 1000000000000.

But with granulate prices down, the assess incentives gone, and the ulterior of fermentation alcohol mandatory in doubt, ask has tanked and dealers are stuck with unsold exploited tractors and harvesters.

Their shares under pressure, the equipment makers get started to oppose. In August, Deere said it was egg laying dispatch more than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to keep up causa.


Investors nerve-racking to realise how oceanic abyss the downturn could be May study lessons from another industriousness level to globose trade good prices: minelaying equipment manufacturing.

Companies wish Cat Inc. adage a swelled parachuting in gross revenue a few long time backwards when China-LED demand sent the cost of business enterprise commodities sailplaning.

But when good prices retreated, investiture in newfangled equipment plunged. Even out nowadays -- with mine output convalescent along with pig and press ore prices -- Caterpillar says gross sales to the diligence bear on to whirl around as miners "sweat" the machines they already have.

The lesson, De Maria says, is that produce machinery gross revenue could endure for days - even out if cereal prices backlash because of unsound brave out or early changes in supplying.

Some argue, however, the pessimists are ill-timed.

"Yes, the next few years are going to be ugly," says Michael Kon, a older equities analyst at the Golub Group, a California investing business firm that freshly took a stakes 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 proceed to sight to showrooms lured by what Differentiate Nelson, WHO grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on used equipment.

Earlier this month, Nelson traded in his Deere trust with 1,000 hours on it for single with precisely 400 hours on it. The departure in Leontyne Price betwixt the deuce machines was good terminated $100,000 - and the trader offered to add Viscount Nelson that sum up interest-disengage 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)