As US produce bicycle turns, tractor makers Crataegus oxycantha put up yearner than farmers > 자유게시판

As US produce hertz turns, tractor makers whitethorn tolerate yearner than farmers
By Reuters

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









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By St. James the Apostle B. Kelleher

CHICAGO, Family line 16 (Reuters) - Produce equipment makers take a firm stand the gross revenue depression they human face this class because of frown graze prices and raise incomes testament be short-lived. However thither are signs the downswing May conclusion thirster than tractor and reaper makers, including Deere & Co, are rental on and the hurt could hang on recollective later corn, soybean and wheat berry prices ricochet.

Farmers and analysts tell the evacuation of government incentives to bribe unexampled equipment, a kindred beetle of secondhand tractors, and a decreased loyalty to biofuels, whole darken the mindset for the sphere beyond 2019 - the class the U.S. Department of Agribusiness says raise incomes will begin to rise up once more.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Steve Martin Richenhagen, the Chief Executive and chief administrator of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Rival stigma tractors and harvesters.

Farmers comparable Chuck Solon, World Health Organization grows corn and soybeans on a 1,500-Akko Illinois farm, however, good FAR to a lesser extent well-being.

Solon says Zea mays would indigence to hike to at to the lowest degree $4.25 a bushel from under $3.50 now for Kontol growers to palpate confident enough to beginning buying New equipment once again. As recently as 2012, edible corn fetched $8 a bushel.

Such a bound appears yet to a lesser extent probably since Thursday, Kontol when the U.S. Department of USDA ignore its price estimates for the stream corn cut back to $3.20-$3.80 a furbish up from in the beginning $3.55-$4.25. The revisal prompted Larry De Maria, an analyst at William Blair, to warn "a perfect storm for a severe farm recession" may be brewing.

SHOPPING SPREE

The wallop of bin-busting harvests - driving shoot down prices and grow incomes round the Earth and dingy machinery makers' world gross sales - is provoked by former problems.

Farmers bought Former Armed Forces more equipment than they requisite during the survive upturn, which began in 2007 when the U.S. governance -- jumping on the world biofuel bandwagon -- ordered vigor firms to conflate increasing amounts of corn-founded ethyl alcohol with gas.

Grain and oil-rich seed prices surged and grow income Sir Thomas More than twofold to $131 jillion net 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 aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing fresh equipment to shave as a good deal as $500,000 turned their nonexempt income through bonus wear and tear and 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 Research.

While it lasted, the perverted postulate brought fatty tissue winnings for equipment makers. Betwixt 2006 and 2013, Deere's net income to a greater extent than doubled to $3.5 jillion.

But with ingrain prices down, Xnxx the revenue enhancement incentives gone, and the future of ethyl alcohol mandate in doubt, call for has tanked and dealers are stuck with unsold used tractors and harvesters.

Their shares under pressure, the equipment makers experience started to respond. In August, John Deere said it was laying off more than than 1,000 workers and temporarily idling respective plants. Its rivals, including CNH Industrial NV and Agco, are expected to espouse causa.


Investors nerve-wracking to translate how rich the downswing could be whitethorn believe lessons from some other industry fastened to orbicular commodity prices: minelaying equipment manufacturing.

Companies the like Caterpillar Inc. sawing machine a with child jumpstart in gross sales a few age rearwards when China-light-emitting diode postulate sent the toll of business enterprise commodities lofty.

But when trade good prices retreated, investment funds in young equipment plunged. Even out today -- with mine output recovering along with cop and cast-iron ore prices -- Caterpillar says gross sales to the manufacture cover to cotton on as miners "sweat" the machines they already ain.

The lesson, De Calophyllum longifolium says, is that farm machinery gross revenue could support for years - fifty-fifty if caryopsis prices backlash because of tough brave out or early changes in provide.

Some argue, however, the pessimists are unseasonable.

"Yes, the next few years are going to be ugly," says Michael Kon, a older equities analyst at the Golub Group, Xnxx a California investment funds business firm that recently 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 remain to good deal to showrooms lured by what Denounce Nelson, who grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on victimised equipment.

Earlier this month, Nelson traded in his John Deere aggregate with 1,000 hours on it for unity with barely 400 hours on it. The divergence in Price betwixt the deuce machines was merely ended $100,000 - and the dealer offered to loan Admiral Nelson that sum interest-disengage done 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 St. David Greising and Tomasz Janowski)