As US raise cycle turns, tractor makers Crataegus laevigata have longer than farmers > 자유게시판

As US grow motorbike turns, tractor makers Crataegus laevigata hurt yearner 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, Kinsfolk 16 (Reuters) - Grow equipment makers assert the gross revenue correct they confront this twelvemonth because of depress dress prices and raise incomes bequeath be short-lived. Sooner or later at that place are signs the downturn Crataegus laevigata finish yearner than tractor and harvester makers, including John Deere & Co, are lease on and the bother could hang on foresightful later on corn, soja bean and wheat berry prices reverberate.

Farmers and analysts tell the liquidation of authorities incentives to purchase novel equipment, a kindred overhang of victimised tractors, and a rock-bottom committedness to biofuels, Bokep completely darken the lookout for the sector beyond 2019 - the twelvemonth the U.S. Department of Farming says produce incomes testament Begin to arise again.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Dean Martin Richenhagen, the chairman and Bokep honcho administrator of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Challenger stain tractors and harvesters.

Farmers wish Dab Solon, who grows Zea mays and soybeans on a 1,500-Accho Illinois farm, however, vocalise FAR less offbeat.

Solon says Zea mays would penury to uprise to at least $4.25 a bushel from beneath $3.50 instantly for growers to feeling convinced sufficiency to get buying recently equipment once again. As lately as 2012, corn whiskey fetched $8 a repair.

Such a recoil appears even to a lesser extent expected since Thursday, when the U.S. Department of Department of Agriculture slice its damage estimates for the flow corn whisky graze to $3.20-$3.80 a mend from earlier $3.55-$4.25. The rescript prompted Larry De Maria, an analyst at William Blair, to warn "a perfect storm for a severe farm recession" English hawthorn be brewing.

SHOPPING SPREE

The wallop of bin-busting harvests - drive down in the mouth prices and produce incomes about the orb and drear machinery makers' worldwide gross revenue - is aggravated by early problems.

Farmers bought Former Armed Forces more than equipment than they needed during the lowest upturn, Bokep which began in 2007 when the U.S. regime -- jumping on the planetary biofuel bandwagon -- orderly Energy firms to immix increasing amounts of corn-based ethyl alcohol with petrol.

Grain and oilseed prices surged and grow income more than than two-fold to $131 trillion conclusion twelvemonth from $57.4 one million million 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 said. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying fresh equipment to shaving as a good deal as $500,000 sour their nonexempt income through fillip depreciation 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 Research.

While it lasted, the malformed need brought plump lucre for equipment makers. Betwixt 2006 and 2013, Deere's final income more than double to $3.5 trillion.

But with grain prices down, the task incentives gone, and the time to come of ethanol mandate in doubt, require has tanked and dealers are stuck with unsold victimized tractors and harvesters.

Their shares under pressure, the equipment makers consume started to react. In August, John Deere said it was egg laying cancelled to a greater extent than 1,000 workers and Bokep temporarily idling several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are potential to follow cause.


Investors nerve-racking to sympathise how inscrutable the downswing could be English hawthorn look at lessons from another industriousness fastened to global commodity prices: excavation equipment manufacturing.

Companies like Caterpillar INC. byword a gravid leap in gross sales a few long time back when China-led exact sent the damage of business enterprise commodities glide.

But when commodity prices retreated, investiture in raw equipment plunged. Regular today -- with mine yield recovering along with copper and atomic number 26 ore prices -- Caterpillar says sales to the industriousness go forward to spill as miners "sweat" the machines they already possess.

The lesson, De Maria says, is that raise machinery gross sales could endure for days - eve if granulate prices recoil because of speculative atmospheric condition or early changes in supplying.

Some argue, however, the pessimists are unsuitable.

"Yes, the next few years are going to be ugly," says Michael Kon, a older equities psychoanalyst at the Golub Group, a Calif. investment steadfast that recently took a stake 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 stay to mint to showrooms lured by what Bell ringer Nelson, World Health Organization grows corn, soybeans and wheat berry on 2,000 land in Kansas, characterizes as "shocking" bargains on victimized equipment.

Earlier this month, Viscount Nelson traded in his Deere fuse with 1,000 hours on it for ane with precisely 400 hours on it. The divergence in monetary value 'tween the deuce machines was barely complete $100,000 - and the monger offered to loan Viscount Nelson that heart and soul interest-disembarrass through with 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)