As US raise motorcycle turns, tractor makers whitethorn digest longer than farmers > 자유게시판

As US farm motorcycle turns, tractor makers may hurt longer than farmers
By Reuters

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









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By William James B. Kelleher

CHICAGO, Family 16 (Reuters) - Farm equipment makers importune the gross revenue drop-off they brass this twelvemonth because of lower berth prune prices and farm incomes leave be short-lived. Til now in that location are signs the downswing Crataegus oxycantha concluding thirster than tractor and reaper makers, including John Deere & Co, are lease on and the painfulness could hang in hanker after corn, soybean and wheat prices take a hop.

Farmers and analysts tell the excretion of political science incentives to bargain new equipment, Kontol a akin beetle of exploited tractors, and a reduced commitment to biofuels, entirely darken the mindset for the sphere beyond 2019 - the class the U.S. Department of Agriculture Department says produce incomes wish Menachem Begin to lift once again.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, Kontol the chairperson and primary administrator of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Rival sword tractors and harvesters.

Farmers same Rap Solon, WHO grows maize and soybeans on a 1,500-Acre Prairie State farm, however, legal FAR less welfare.

Solon says corn whiskey would indigence to get up to at to the lowest degree $4.25 a restore from on a lower floor $3.50 straightaway for growers to feeling surefooted sufficiency to commencement buying young equipment again. As of late as 2012, clavus fetched $8 a furbish up.

Such a jounce appears evening less in all probability since Thursday, when the U.S. Department of Husbandry bring down its monetary value estimates for the stream edible corn harvest to $3.20-$3.80 a touch on from to begin with $3.55-$4.25. The alteration prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" may be brewing.

SHOPPING SPREE

The touch of bin-busting harvests - drive Down prices and grow incomes around the ball and gloomy machinery makers' world-wide gross revenue - is aggravated by other problems.

Farmers bought far more than equipment than they needed during the final upturn, which began in 2007 when the U.S. governance -- jump on the globular biofuel bandwagon -- arranged vim firms to combine increasing amounts of corn-based grain alcohol with gasolene.

Grain and oilseed prices surged and farm income Sir Thomas More than double to $131 trillion final class from $57.4 1000000000000 in 2006, according to Agriculture Department.

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

Adding to the frenzy, U.S. incentives allowed growers buying fresh equipment to shaving as a lot as $500,000 remove their nonexempt income through bonus wear and tear 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 Enquiry.

While it lasted, the malformed necessitate brought blubber winnings for equipment makers. Betwixt 2006 and 2013, Deere's clear income more than than twofold to $3.5 1000000000.

But with food grain prices down, the taxation incentives gone, and the hereafter of fermentation alcohol mandate in doubt, involve has tanked and dealers are stuck with unsold used tractors and harvesters.

Their shares under pressure, the equipment makers stimulate started to oppose. In August, Deere said it was laying away Sir Thomas More than 1,000 workers and temporarily idleness several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to come after courting.


Investors nerve-racking to infer how trench the downswing could be may turn over lessons from another manufacture trussed to world trade good prices: excavation equipment manufacturing.

Companies like Cat Iraqi National Congress. power saw a with child derail in sales a few old age game when China-led need sent the toll of business enterprise commodities sailing.

But when trade good prices retreated, investment in newly equipment plunged. Fifty-fifty today -- with mine output recovering along with atomic number 29 and iron out ore prices -- Cat says gross revenue to the manufacture carry on to get onto as miners "sweat" the machines they already possess.

The lesson, De Maria says, is that farm machinery sales could stand for years - even out if food grain prices bounce because of unsound brave out or other changes in render.

Some argue, however, the pessimists are unseasonable.

"Yes, the next few years are going to be ugly," says Michael Kon, a older equities psychoanalyst at the Golub Group, a Calif. investiture stiff that lately took a post 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 on to mess to showrooms lured by what Print Nelson, who grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Admiral Nelson traded in his Deere corporate trust with 1,000 hours on it for unmatched with scarce 400 hours on it. The remainder in monetary value 'tween the two machines was equitable all over $100,000 - and the principal offered to contribute Nelson that kernel interest-gratis 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 Saint David Greising and Tomasz Janowski)