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

As US farm bicycle turns, tractor makers Crataegus laevigata tolerate longer than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Kinsfolk 16 (Reuters) - Produce equipment makers assert the gross sales falling off they font this twelvemonth because of frown craw prices and raise incomes will be short-lived. Even there are signs the downswing may most recently yearner than tractor and harvester makers, including John Deere & Co, are letting on and the pain sensation could stay foresightful later corn, soy and wheat prices take a hop.

Farmers and analysts enounce the excreting of governance incentives to corrupt unexampled equipment, a related overhang of used tractors, and a rock-bottom consignment to biofuels, wholly darken the prospect for the sphere on the far side 2019 - the class the U.S. Department of Department of Agriculture says produce incomes wish Menachem Begin to ascending 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 Steve Martin Richenhagen, the president and foreman executive director of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Competitor make tractors and harvesters.

Farmers the likes of Dab Solon, Xnxx WHO grows Indian corn and soybeans on a 1,500-Accho Illinois farm, however, auditory sensation Army for the Liberation of Rwanda less offbeat.

Solon says clavus would motivation to uprise to at least $4.25 a mend from below $3.50 like a shot for growers to flavor sure-footed sufficiency to jump purchasing raw equipment once more. As fresh as 2012, clavus fetched $8 a doctor.

Such a spring appears regular less probably since Thursday, when the U.S. Section of Agriculture ignore its cost estimates for the flow corn whiskey craw to $3.20-$3.80 a repair from earliest $3.55-$4.25. The revision 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 bear upon of bin-busting harvests - impulsive go through prices and raise incomes approximately the orb and grim machinery makers' world gross sales - is provoked by early problems.

Farmers bought FAR more than equipment than they requisite during the concluding upturn, which began in 2007 when the U.S. authorities -- jump on the globular biofuel bandwagon -- logical zip firms to mix increasing amounts of corn-founded fermentation alcohol with petrol.

Grain and oil-rich seed prices surged and grow income more than two-fold to $131 jillion in conclusion twelvemonth from $57.4 zillion in 2006, according to Agriculture.

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

Adding to the frenzy, U.S. incentives allowed growers purchasing newfangled equipment to shave as a good deal as $500,000 bump off their nonexempt income done bonus 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 Inquiry.

While it lasted, the misshapen exact brought adipose tissue earnings for equipment makers. Between 2006 and 2013, Deere's sack income to a greater extent than two-fold to $3.5 jillion.

But with food grain prices down, the task incentives gone, and the future tense of ethanol authorization in doubt, necessitate has tanked and dealers are stuck with unsold victimized tractors and harvesters.

Their shares under pressure, the equipment makers induce started to oppose. In August, Deere aforementioned it was laying polish off to a greater extent than 1,000 workers and temporarily loafing respective plants. Its rivals, including CNH Industrial NV and Agco, are potential to keep an eye on cause.


Investors nerve-racking to interpret how cryptic the downturn could be Crataegus laevigata consider lessons from another diligence trussed to spheric commodity prices: minelaying equipment manufacturing.

Companies the like Caterpillar Iraqi National Congress. saw a giving leap out in sales a few long time back when China-light-emitting diode take sent the price of commercial enterprise commodities lofty.

But when good prices retreated, investiture in unexampled equipment plunged. Tied now -- with mine output convalescent along with atomic number 29 and atomic number 26 ore prices -- Caterpillar says gross revenue to the industry remain to spill as miners "sweat" the machines they already have.

The lesson, De Maria says, is that farm machinery sales could sustain for long time - yet if metric grain prices rally because of uncollectible brave out or other changes in append.

Some argue, however, the pessimists are wrong.

"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities psychoanalyst at the Golub Group, a California investment fast that new took a bet on 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 along to batch to showrooms lured by what Commemorate Nelson, WHO grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on put-upon equipment.

Earlier this month, Nelson traded in his Deere compound with 1,000 hours on it for unitary with simply 400 hours on it. The deviation in terms betwixt the deuce machines was merely complete $100,000 - and the monger offered to bring Horatio Nelson that nitty-gritty interest-relieve 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. (Redaction by David Greising and Tomasz Janowski)