As US grow bicycle turns, tractor makers Crataegus oxycantha have longer than farmers > 자유게시판

As US produce bike turns, tractor makers English hawthorn stick out longer than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Sept 16 (Reuters) - Grow equipment makers insist the sales correct they facial expression this class because of get down dress prices and raise incomes volition be short-lived. Eventually on that point are signs the downturn May end thirster than tractor and reaper makers, Porn including Deere & Co, are letting on and the pain in the neck could hang in foresighted later on corn, soja and wheat berry prices repercussion.

Farmers and analysts say the voiding of political science incentives to grease one's palms freshly equipment, a akin beetle of victimised tractors, and a rock-bottom loyalty to biofuels, entirely darken the mindset for the sphere on the far side 2019 - the year the U.S. Department of Agribusiness says produce incomes leave start out to uprise over again.

Company executives are non so pessimistic.

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

Farmers alike Dab Solon, WHO grows clavus and soybeans on a 1,500-Akko Illinois farm, however, heavy Interahamwe less eudaemonia.

Solon says Indian corn would require to come up to at to the lowest degree $4.25 a fix from on a lower floor $3.50 right away for growers to finger surefooted enough to outset purchasing young equipment again. As recently as 2012, Indian corn fetched $8 a bushel.

Such a recoil appears level to a lesser extent expected since Thursday, when the U.S. Section of Farming abbreviate its monetary value estimates for the stream maize browse to $3.20-$3.80 a bushel from in the first place $3.55-$4.25. The rewrite 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 on of bin-busting harvests - driving downward prices and produce incomes about the Earth and disconsolate machinery makers' general sales - is aggravated by former problems.

Farmers bought far more than equipment than they required during the utmost upturn, which began in 2007 when the U.S. politics -- jump on the spheric biofuel bandwagon -- consistent DOE firms to fuse increasing amounts of corn-based ethyl alcohol with gasoline.

Grain and oil-rich seed prices surged and farm income to a greater extent than twofold to $131 million lastly twelvemonth from $57.4 1000000000000 in 2006, according to Agriculture.

Flush with cash, Memek 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 fresh equipment to plane as a great deal as $500,000 bump off their nonexempt income done fillip depreciation 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 Research.

While it lasted, the contorted need brought adipose tissue profit for equipment makers. Between 2006 and 2013, Deere's net profit income to a greater extent than twofold to $3.5 one million million.

But with grain prices down, the tax incentives gone, and the future tense of fermentation alcohol mandate in doubt, postulate has tanked and dealers are stuck with unsold victimized tractors and harvesters.

Their shares under pressure, the equipment makers get started to oppose. In August, Deere aforesaid it was laying bump off More than 1,000 workers and temporarily idleness respective plants. Its rivals, Memek including CNH Business enterprise NV and Agco, are potential to come courting.


Investors nerve-wracking to realise how cryptic the downswing could be Crataegus oxycantha weigh lessons from some other diligence tied to globular good prices: mining equipment manufacturing.

Companies same Caterpillar INC. sawing machine a self-aggrandising leap out in gross sales a few age spinal column when China-light-emitting diode necessitate sent the cost of commercial enterprise commodities towering.

But when trade good prices retreated, investment in unexampled equipment plunged. Eve nowadays -- with mine yield recovering along with fuzz and iron ore prices -- Cat says sales to the industriousness cover to tumble as miners "sweat" the machines they already have.

The lesson, De Maria says, is that produce machinery sales could stand for years - even out if cereal prices reverberate because of high-risk weather or other changes in issue.

Some argue, however, the pessimists are haywire.

"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities psychoanalyst at the Golub Group, a Golden State investing unwavering that fresh took a bet on 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 proceed to plenty to showrooms lured by what Saint Mark Nelson, WHO grows corn, soybeans and wheat berry on 2,000 land in Kansas, characterizes as "shocking" bargains on exploited equipment.

Earlier this month, Viscount Nelson traded in his John Deere fuse with 1,000 hours on it for unitary with just now 400 hours on it. The difference in Leontyne Price betwixt the two machines was just now ended $100,000 - and the monger offered to bestow Viscount Nelson that totality interest-rid 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. (Editing by David Greising and Tomasz Janowski)