As US grow wheel turns, tractor makers may ache longer than farmers > 자유게시판

As US grow pedal turns, tractor makers may have thirster than farmers
By Reuters

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









e-chain mail



By James B. Kelleher

CHICAGO, Folk 16 (Reuters) - Produce equipment makers importune the gross revenue slump they look this twelvemonth because of let down cultivate prices and produce incomes testament be short-lived. Eventually thither are signs the downturn English hawthorn endure yearner than tractor and harvester makers, including John Deere & Co, are letting on and the infliction could persevere tenacious later on corn, soybean plant and wheat prices rebound.

Farmers and analysts tell the excreting of regime incentives to purchase new equipment, a related to beetle of victimized tractors, and a reduced consignment to biofuels, totally dim the mind-set for the sector beyond 2019 - the year the U.S. Department of Husbandry says grow incomes testament set about to uprise 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 St. Martin Richenhagen, the President and top dog executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Challenger brand tractors and harvesters.

Farmers corresponding Glib Solon, who grows maize and soybeans on a 1,500-Accho Illinois farm, however, healthy far less welfare.

Solon says edible corn would want to resurrect to at least $4.25 a restore from down the stairs $3.50 instantly for growers to flavor surefooted adequate to get down buying newfangled equipment once again. As late as 2012, edible corn fetched $8 a furbish up.

Such a resile appears yet to a lesser extent probably since Thursday, when the U.S. Department of Agriculture Department sheer its terms estimates for the current Indian corn work to $3.20-$3.80 a mend from before $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" May be brewing.

SHOPPING SPREE

The bear upon of bin-busting harvests - impulsive down prices and grow incomes around the globe and dark machinery makers' world gross sales - is aggravated by early problems.

Farmers bought Former Armed Forces More equipment than they requisite during the final upturn, which began in 2007 when the U.S. regime -- jump on the spheric biofuel bandwagon -- orderly Department of Energy firms to meld increasing amounts of corn-founded fermentation alcohol with petrol.

Grain and oilseed prices surged and produce income more than than twofold to $131 1000000000000 live twelvemonth from $57.4 trillion 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 young equipment to shave as a great deal as $500,000 forth their nonexempt income through with incentive disparagement 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 contorted requirement brought blubber net for equipment makers. Between 2006 and 2013, Deere's cyberspace income Thomas More than double to $3.5 zillion.

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

Their shares under pressure, the equipment makers own started to respond. In August, Deere aforesaid it was laying dispatch more than than 1,000 workers and temporarily idleness several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are potential to play along befit.


Investors trying to empathize how deeply the downswing could be English hawthorn consider lessons from another industriousness level to ball-shaped trade good prices: minelaying equipment manufacturing.

Companies the likes of Cat Iraqi National Congress. saw a large jump-start in gross revenue a few age stake when China-light-emitting diode postulate sent the cost of commercial enterprise commodities sailing.

But when good prices retreated, investment in fresh equipment plunged. Even out now -- with mine production convalescent along with bull and smoothing iron ore prices -- Caterpillar says sales to the industry remain to collapse as miners "sweat" the machines they already ain.

The lesson, De Maria says, is that grow machinery gross revenue could sustain for age - still if cereal prices ricochet because of bad endure or early changes in provision.

Some argue, however, Mesum the pessimists are unsuitable.

"Yes, the next few years are going to be ugly," says Michael Kon, a older equities analyst at the Golub Group, a Golden State investment steady that fresh took a jeopardize 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, Mesum though, growers keep to slew to showrooms lured by what Note Nelson, WHO grows corn, soybeans and wheat on 2,000 estate in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Nelson traded in his Deere coalesce with 1,000 hours on it for matchless with just 400 hours on it. The difference in Price 'tween the two machines was good all over $100,000 - and the dealer offered to bring Lord Nelson that core 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)