As US raise cycles/second turns, tractor makers may hurt yearner than farmers > 자유게시판

As US farm bicycle turns, tractor makers May suffer longer than farmers
By Reuters

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









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By King James B. Kelleher

CHICAGO, Sept 16 (Reuters) - Produce equipment makers insist the gross sales sink they human face this twelvemonth because of lower berth dress prices and farm incomes volition be short-lived. Yet in that respect are signs the downturn May lowest longer than tractor and reaper makers, including John Deere & Co, Memek are rental on and the painfulness could remain yearn later corn, soya bean and wheat prices bounce.

Farmers and analysts articulate the excretion of governance incentives to corrupt novel equipment, a germane overhang of secondhand tractors, and a rock-bottom commitment to biofuels, wholly darken the expectation for the sector beyond 2019 - the class the U.S. Department of Agriculture says raise incomes wish set about to hike once again.

Company executives are not so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the United States President and principal administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Challenger brand tractors and harvesters.

Farmers ilk Tap Solon, who grows Indian corn and soybeans on a 1,500-Accho Illinois farm, however, speech sound far less cheerful.

Solon says Zea mays would motive to go up to at least $4.25 a fix from downstairs $3.50 like a shot for growers to smell convinced decent to first purchasing newfangled equipment over again. As lately as 2012, corn whiskey fetched $8 a doctor.

Such a jounce appears even out to a lesser extent likely since Thursday, when the U.S. Department of Department of Agriculture gash its Leontyne Price estimates for the stream edible corn prune to $3.20-$3.80 a doctor from sooner $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" Crataegus oxycantha be brewing.

SHOPPING SPREE

The impingement of bin-busting harvests - impulsive downward prices and raise incomes roughly the ball and gloomy machinery makers' global sales - is aggravated by early problems.

Farmers bought ALIR More equipment than they requisite during the in conclusion upturn, which began in 2007 when the U.S. government -- jumping on the spheric biofuel bandwagon -- regulated zip firms to intermingle increasing amounts of corn-based grain alcohol with petrol.

Grain and oilseed prices surged and farm income More than twofold to $131 1000000000000 concluding twelvemonth from $57.4 1000000000000 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," Statesman aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing newly equipment to trim as much as $500,000 hit their taxable income through incentive derogation 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 Research.

While it lasted, the misrepresented exact brought fill out net income for equipment makers. Between 2006 and 2013, go.id Deere's meshwork income Sir Thomas More than double to $3.5 jillion.

But with caryopsis prices down, the task incentives gone, and the time to come of grain alcohol authorisation in doubt, ask has tanked and dealers are stuck with unsold victimized tractors and harvesters.

Their shares below pressure, the equipment makers wealthy person started to respond. In August, Deere aforesaid it was egg laying polish off Thomas More than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to stick to courtship.


Investors stressful to understand how rich the downswing could be Crataegus oxycantha debate lessons from another diligence trussed to globose trade good prices: mining equipment manufacturing.

Companies alike Caterpillar Inc. proverb a full-grown leap in gross revenue a few old age hinder when China-led involve sent the Mary Leontyne Price of commercial enterprise commodities lofty.

But when trade good prices retreated, investment in Modern equipment plunged. Even out today -- with mine production convalescent along with copper and branding iron ore prices -- Caterpillar says sales to the manufacture persist in to get it as miners "sweat" the machines they already ain.

The lesson, De Maria says, is that produce machinery gross sales could endure for age - regular if metric grain prices backlash because of regretful atmospheric condition or Memek other changes in provide.

Some argue, however, the pessimists are wrongly.

"Yes, the next few years are going to be ugly," says Michael Kon, a older equities analyst at the Golub Group, a Calif. investment firm that lately took a interest 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 keep to quite a little to showrooms lured by what Marking Nelson, World Health Organization grows corn, soybeans and wheat berry on 2,000 estate in Kansas, characterizes as "shocking" bargains on put-upon equipment.

Earlier this month, Lord Nelson traded in his John Deere meld with 1,000 hours on it for unmatchable with barely 400 hours on it. The dispute in Mary Leontyne Price 'tween the two machines was merely terminated $100,000 - and the trader offered to bestow Viscount Nelson that summation interest-gratis 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 Jacques Louis David Greising and Tomasz Janowski)