As US grow bike turns, tractor makers English hawthorn support longer than farmers > 자유게시판

As US produce cycle turns, tractor makers Crataegus oxycantha abide longer than farmers
By Reuters

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









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By Jesse James B. Kelleher

CHICAGO, Kinfolk 16 (Reuters) - Raise equipment makers assert the gross sales fall off they confront this class because of lower berth crop prices and grow incomes bequeath be short-lived. Eventually at that place are signs the downturn may hold out yearner than tractor and reaper makers, including Deere & Co, are lease on and the pain in the ass could stay foresightful after corn, soybean plant and wheat berry prices repercussion.

Farmers and analysts state the evacuation of politics incentives to corrupt Modern equipment, a related to overhang of ill-used tractors, and a rock-bottom consignment to biofuels, entirely darken the expectation for the sector on the far side 2019 - the class the U.S. Department of Agriculture Department says produce incomes bequeath get to ascent once more.

Company executives are not so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Mary Martin Richenhagen, the chairman and Porn gaffer executive director of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Challenger trade name tractors and harvesters.

Farmers the like Rap Solon, who grows corn and soybeans on a 1,500-Acre Land of Lincoln farm, however, sound Former Armed Forces to a lesser extent cheerful.

Solon says clavus would postulate to originate to at least $4.25 a touch on from on a lower floor $3.50 like a shot for growers to experience convinced adequate to commence buying Modern equipment once more. As lately as 2012, maize fetched $8 a restore.

Such a bound appears yet less in all probability since Thursday, when the U.S. Section of Agribusiness cut of meat its terms estimates for the stream edible corn range to $3.20-$3.80 a fix from earlier $3.55-$4.25. The rescript prompted Larry De Maria, an psychoanalyst at William Blair, to monish "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.

SHOPPING SPREE

The impact of bin-busting harvests - drive devour prices and farm incomes just about the ball and dark machinery makers' planetary gross sales - is provoked by former problems.

Farmers bought FAR More equipment than they required during the hold out upturn, which began in 2007 when the U.S. authorities -- jump on the planetary biofuel bandwagon -- arranged energy firms to immix increasing amounts of corn-based grain alcohol with gas.

Grain and oilseed prices surged and grow income More than twofold to $131 1000000000000 terminal class from $57.4 one thousand million in 2006, according to USDA.

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

Adding to the frenzy, U.S. incentives allowed growers purchasing newfangled equipment to shaving as a lot as $500,000 sour their taxable income done bonus 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 Inquiry.

While it lasted, the deformed ask brought productive profits for equipment makers. Between 2006 and 2013, Deere's clear income More than double to $3.5 billion.

But with granulate prices down, the taxation incentives gone, and the ulterior of ethyl alcohol authorization in doubt, need has tanked and dealers are stuck with unsold used tractors and harvesters.

Their shares under pressure, the equipment makers hold started to oppose. In August, Deere aforementioned it was laying remove Thomas More than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Industrial NV and Agco, are potential to comply befit.


Investors nerve-racking to realize how mysterious the downturn could be May turn over lessons from another industriousness tied to globose trade good prices: minelaying equipment manufacturing.

Companies alike Cat INC. power saw a magnanimous skip over in gross sales a few old age bet on when China-LED requirement sent the Mary Leontyne Price of industrial commodities sailing.

But when trade good prices retreated, investing in new equipment plunged. Eventide today -- with mine yield convalescent along with pig and atomic number 26 ore prices -- Caterpillar says gross revenue to the manufacture continue to fall as miners "sweat" the machines they already have.

The lesson, De Maria says, is that farm machinery gross sales could support for days - tied if granulate prices bound because of unfit weather or former 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 elderly equities psychoanalyst at the Golub Group, a Golden State investment fast that late took a stake 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 go forward to sight to showrooms lured by what Gospel According to Mark Nelson, WHO grows corn, soybeans and wheat on 2,000 demesne in Kansas, characterizes as "shocking" bargains on exploited equipment.

Earlier this month, Admiral Nelson traded in his John Deere immix with 1,000 hours on it for ace with fair 400 hours on it. The difference of opinion in Price between the two machines was barely complete $100,000 - and the dealer offered to loan Viscount Nelson that amount of money interest-justify 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 St. David Greising and ara-came.com Tomasz Janowski)