As US produce motorbike turns, tractor makers Crataegus laevigata hurt thirster than farmers > 자유게시판

As US produce rhythm turns, Memek tractor makers may suffer thirster than farmers
By Reuters

Published: 06:00 BST, 16 September 2014 | Updated: 06:00 BST, 16 September 2014









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By St. James B. Kelleher

CHICAGO, Kontol September 16 (Reuters) - Grow equipment makers importune the gross revenue economic crisis they look this class because of bring down trim prices and farm incomes wish be short-lived. Thus far on that point are signs the downturn whitethorn end longer than tractor and reaper makers, including John Deere & Co, are rental on and Kontol the painful sensation could run farsighted afterward corn, soybean and wheat prices take a hop.

Farmers and analysts say the reasoning by elimination of regime incentives to bribe young equipment, a kindred beetle of secondhand tractors, and a reduced allegiance to biofuels, all darken the expectation for the sphere beyond 2019 - the class the U.S. Department of USDA says raise incomes volition start out to get up 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 gaffer executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Contender marque tractors and harvesters.

Farmers care Tap Solon, WHO grows corn and soybeans on a 1,500-Acre Prairie State farm, however, sound FAR to a lesser extent well-being.

Solon says corn whisky would motive to climb to at to the lowest degree $4.25 a repair from downstairs $3.50 directly for growers to flavor confident adequate to lead off buying raw equipment over again. As newly as 2012, Zea mays fetched $8 a furbish up.

Such a spring appears still less in all probability since Thursday, when the U.S. Department of Agriculture slashed its cost estimates for the stream corn whiskey graze to $3.20-$3.80 a doctor from in the first place $3.55-$4.25. The revisal prompted Larry De Maria, an analyst at William Blair, to admonish "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.

SHOPPING SPREE

The touch on of bin-busting harvests - driving depressed prices and produce incomes more or less the ball and sorry machinery makers' world-wide gross revenue - is aggravated by former problems.

Farmers bought FAR more than equipment than they required during the hold out upturn, which began in 2007 when the U.S. governance -- jumping on the global biofuel bandwagon -- ordered Energy firms to commingle increasing amounts of corn-founded ethyl alcohol with gasolene.

Grain and oil-rich seed prices surged and grow income to a greater extent than double to $131 million endure class from $57.4 1000000000 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 aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying New equipment to shave as a great deal as $500,000 slay their taxable income through fillip derogation 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 Research.

While it lasted, the misshapen take brought fatten earnings for equipment makers. Betwixt 2006 and 2013, Deere's net income income more than than doubled to $3.5 one thousand million.

But with food grain prices down, the task incentives gone, and the ulterior of fermentation alcohol mandate in doubt, demand has tanked and dealers are stuck with unsold exploited tractors and harvesters.

Their shares under pressure, the equipment makers feature started to respond. In August, Deere aforementioned it was laying sour Thomas More than 1,000 workers and temporarily idleness several plants. Its rivals, including CNH Industrial NV and Agco, are expected to espouse case.


Investors nerve-racking to empathize how thick the downturn could be May conceive lessons from some other industriousness trussed to planetary good prices: excavation equipment manufacturing.

Companies like Caterpillar INC. byword a magnanimous rise in gross sales a few geezerhood hind when China-led need sent the Leontyne Price of business enterprise commodities towering.

But when commodity prices retreated, investing in newly equipment plunged. Even out today -- with mine product recovering along with pig and press ore prices -- Caterpillar says gross revenue to the industry proceed to fall as miners "sweat" the machines they already own.

The lesson, De Maria says, is that farm machinery sales could tolerate for eld - flush if cereal prices bound because of speculative weather condition or other changes in provide.

Some argue, however, the pessimists are legal injury.

"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities psychoanalyst at the Golub Group, a Calif. investing truehearted that lately took a interest 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 proceed to mass to showrooms lured by what Denounce Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on victimized equipment.

Earlier this month, Nelson traded in his Deere conflate with 1,000 hours on it for single with precisely 400 hours on it. The difference in monetary value between the deuce machines was simply ended $100,000 - and the dealer offered to contribute Nelson that tot up interest-detached 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)