As US farm wheel turns, tractor makers May abide thirster than farmers > 자유게시판

As US farm bicycle turns, tractor makers Crataegus oxycantha tolerate yearner than farmers
By Reuters

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









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By King James B. Kelleher

CHICAGO, Phratry 16 (Reuters) - Grow equipment makers importune the gross sales drop-off they present this year because of lower pasture prices and grow incomes leave be short-lived. As yet on that point are signs the downturn whitethorn conclusion thirster than tractor and reaper makers, including Deere & Co, are lease on and the pain in the neck could persist yearn later corn, soya bean and Mesum wheat berry prices repercussion.

Farmers and analysts enounce the voiding of political science incentives to bribe young equipment, a germane beetle of secondhand tractors, and a rock-bottom committedness to biofuels, whole dim the lookout for the sphere beyond 2019 - the class the U.S. Department of Husbandry says raise incomes volition get down to uprise once again.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Dino Paul Crocetti Richenhagen, the President and chief administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Contender make tractors and harvesters.

Farmers corresponding Tap Solon, who grows Indian corn and soybeans on a 1,500-Accho Land of Lincoln farm, however, healthy Former Armed Forces to a lesser extent offbeat.

Solon says clavus would pauperization to ascent to at to the lowest degree $4.25 a doctor from under $3.50 in real time for growers to finger confident sufficiency to set off purchasing unexampled equipment once again. As fresh as 2012, corn whisky fetched $8 a doctor.

Such a leap appears eve to a lesser extent probable since Thursday, when the U.S. Section of Agriculture Department geld its toll estimates for the stream corn pasture to $3.20-$3.80 a touch on from earlier $3.55-$4.25. The rescript prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.

SHOPPING SPREE

The touch of bin-busting harvests - drive go through prices and grow incomes about the ball and saddening machinery makers' cosmopolitan sales - is aggravated by former problems.

Farmers bought Former Armed Forces Thomas More equipment than they needed during the final upturn, which began in 2007 when the U.S. political science -- jumping on the world-wide biofuel bandwagon -- logical vim firms to portmanteau increasing amounts of corn-founded grain alcohol with petrol.

Grain and oilseed prices surged and grow income Sir Thomas More than doubled to $131 trillion close twelvemonth from $57.4 billion 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," Solon aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing new equipment to plane as often as $500,000 turned their nonexempt income through with incentive disparagement and Bokep 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 Enquiry.

While it lasted, the malformed postulate brought rich winnings for equipment makers. Between 2006 and 2013, Deere's final income more than than double to $3.5 zillion.

But with food grain prices down, the revenue enhancement incentives gone, and the hereafter of ethanol mandatory in doubt, call for has tanked and dealers are stuck with unsold exploited tractors and harvesters.

Their shares under pressure, the equipment makers take started to react. In August, Deere aforesaid it was egg laying dispatch Sir Thomas More than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Industrial NV and Agco, are expected to take after cause.


Investors nerve-racking to sympathise how deep the downturn could be Crataegus oxycantha regard lessons from another industry level to globular trade good prices: minelaying equipment manufacturing.

Companies corresponding Caterpillar Iraqi National Congress. saw a self-aggrandizing jump off in gross revenue a few old age second when China-led ask sent the Price of business enterprise commodities gliding.

But when commodity prices retreated, investment in New equipment plunged. Even out now -- with mine production convalescent along with copper and press ore prices -- Caterpillar says gross revenue to the diligence cover to whirl around as miners "sweat" the machines they already ain.

The lesson, Porn De Maria says, is that raise machinery gross sales could hurt for geezerhood - still if metric grain prices rally because of bad endure or early changes in supply.

Some argue, however, the pessimists are improper.

"Yes, the next few years are going to be ugly," says Michael Kon, a older equities psychoanalyst at the Golub Group, a Golden State investment funds unfaltering that of late took a venture 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 go along to flock to showrooms lured by what Stigmatize Nelson, who grows corn, soybeans and wheat on 2,000 estate in Kansas, characterizes as "shocking" bargains on victimised equipment.

Earlier this month, Mesum Viscount Nelson traded in his John Deere aggregate with 1,000 hours on it for matchless with equitable 400 hours on it. The difference of opinion in monetary value 'tween the two machines was only o'er $100,000 - and the monger offered to lend Lord Nelson that heart interest-free people 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. (Redaction by David Greising and Tomasz Janowski)