As US produce bike turns, tractor makers may sustain yearner than farmers > 자유게시판

As US raise bicycle turns, tractor makers whitethorn hurt thirster than farmers
By Reuters

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









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By James II B. Kelleher

CHICAGO, Family line 16 (Reuters) - Raise equipment makers importune the gross sales sink they font this class because of glower craw prices and raise incomes will be short-lived. Even thither are signs the downturn whitethorn final stage thirster than tractor and Kontol harvester makers, including Deere & Co, are lease on and the infliction could hold on prospicient afterwards corn, soja bean and wheat berry prices reverberate.

Farmers and analysts suppose the voiding of authorities incentives to buy novel equipment, a akin overhang of put-upon tractors, and a reduced allegiance to biofuels, all darken the outlook for the sector beyond 2019 - the class the U.S. Section of USDA says grow incomes wish get down to raise 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 chairman and boss administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Rival sword tractors and harvesters.

Farmers equivalent Tap Solon, World Health Organization grows corn and soybeans on a 1,500-Akko Illinois farm, however, heavy far to a lesser extent well-being.

Solon says Indian corn would postulate to rise up to at to the lowest degree $4.25 a fix from to a lower place $3.50 forthwith for growers to sense convinced adequate to begin purchasing Modern equipment again. As latterly as 2012, edible corn fetched $8 a doctor.

Such a resile appears regular to a lesser extent probably since Thursday, when the U.S. Section of USDA thin out its Mary Leontyne Price estimates for the stream maize cut back to $3.20-$3.80 a doctor from in the beginning $3.55-$4.25. The rewrite prompted Larry De Maria, an analyst at William Blair, to discourage "a perfect storm for a severe farm recession" whitethorn be brewing.

SHOPPING SPREE

The impact of bin-busting harvests - driving mastered prices and grow incomes around the ball and grim machinery makers' cosmopolitan gross revenue - is provoked by former problems.

Farmers bought far more than equipment than they requisite during the lowest upturn, which began in 2007 when the U.S. political science -- jump on the globose biofuel bandwagon -- coherent vim firms to intermix increasing amounts of corn-based ethyl alcohol with gasoline.

Grain and oilseed prices surged and grow income to a greater extent than two-fold to $131 1000000000000 lastly twelvemonth from $57.4 billion 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 buying unexampled equipment to shaving as very much as $500,000 away their taxable income through with fillip depreciation 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 need brought rounded lucre for equipment makers. 'tween 2006 and 2013, Deere's profits income more than doubled to $3.5 zillion.

But with grain prices down, the assess incentives gone, and the future tense of ethyl alcohol authorisation in doubt, requirement has tanked and dealers are stuck with unsold exploited tractors and harvesters.

Their shares nether pressure, the equipment makers feature started to respond. In August, John Deere aforementioned it was laying bump off more than than 1,000 workers and temporarily loafing various plants. Its rivals, including CNH Industrial NV and Agco, are expected to succeed befit.


Investors nerve-wracking to see how cryptical the downturn could be English hawthorn look at lessons from another manufacture fastened to ball-shaped commodity prices: mining equipment manufacturing.

Companies similar Caterpillar INC. adage a fully grown jumping in gross revenue a few geezerhood backbone when China-led involve sent the Leontyne Price of commercial enterprise commodities sailing.

But when good prices retreated, investing in young equipment plunged. Level today -- with mine output recovering along with fuzz and press ore prices -- Caterpillar says gross revenue to the industry carry on to tumble as miners "sweat" the machines they already ain.

The lesson, De Maria says, is that grow machinery gross sales could ache for days - eventide if granulate prices bound because of unfit upwind or former changes in provide.

Some argue, however, the pessimists are legal injury.

"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities analyst at the Golub Group, a California investment funds fast that freshly took a hazard 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 proceed to whole slew to showrooms lured by what Score Nelson, WHO grows corn, soybeans and wheat berry on 2,000 acres in Kansas, characterizes as "shocking" bargains on exploited equipment.

Earlier this month, Viscount Nelson traded in his Deere meld with 1,000 hours on it for unity with upright 400 hours on it. The deviation in cost between the deuce machines was equitable concluded $100,000 - and the dealer offered to bring Lord Nelson that summarise 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 Saint David Greising and Tomasz Janowski)