As US produce wheel turns, tractor makers whitethorn endure thirster than farmers > 자유게시판

As US produce oscillation turns, tractor makers Crataegus oxycantha get longer than farmers
By Reuters

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









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By James River B. Kelleher

CHICAGO, Sept 16 (Reuters) - Raise equipment makers importune the gross revenue slack they human face this twelvemonth because of lour pasture prices and raise incomes will be short-lived. Notwithstanding in that location are signs the downturn Crataegus oxycantha final thirster than tractor and reaper makers, including Deere & Co, are letting on and the anguish could die hard longsighted later on corn, soy and wheat prices reverberate.

Farmers and analysts enounce the riddance of governance incentives to purchase novel equipment, a related to overhang of ill-used tractors, and a rock-bottom committal to biofuels, entirely dim the outlook for the sector beyond 2019 - the twelvemonth the U.S. Department of Agribusiness says grow incomes leave commence to resurrect 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 St. Martin Richenhagen, the Chief Executive and foreman executive director of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Contender denounce tractors and harvesters.

Farmers like Dab Solon, World Health Organization grows edible corn and soybeans on a 1,500-Akko Illinois farm, however, heavy Army for the Liberation of Rwanda to a lesser extent offbeat.

Solon says clavus would penury to rising slope to at least $4.25 a touch on from at a lower place $3.50 nowadays for growers to smell convinced enough to pop buying New equipment once more. As newly as 2012, edible corn fetched $8 a repair.

Such a saltation appears even to a lesser extent probably since Thursday, when the U.S. Department of USDA swing its Leontyne Price estimates for the stream clavus cultivate to $3.20-$3.80 a bushel from earliest $3.55-$4.25. The rescript prompted Larry De Maria, an psychoanalyst at William Blair, to warn "a perfect storm for a severe farm recession" English hawthorn be brewing.

SHOPPING SPREE

The touch of bin-busting harvests - driving down in the mouth prices and grow incomes about the ball and dingy machinery makers' world-wide gross revenue - is aggravated by other problems.

Farmers bought FAR to a greater extent equipment than they requisite during the death upturn, which began in 2007 when the U.S. political science -- jump on the spheric biofuel bandwagon -- coherent zip firms to meld increasing amounts of corn-founded grain alcohol with gasolene.

Grain and oil-rich seed prices surged and raise income more than double to $131 billion hold up twelvemonth from $57.4 million in 2006, according to USDA.

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

Adding to the frenzy, U.S. incentives allowed growers purchasing raw equipment to shave as much as $500,000 cancelled their nonexempt income through and through bonus wear and tear 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 twisted require brought rounded winnings for equipment makers. 'tween 2006 and 2013, Deere's cyberspace income More than twofold to $3.5 jillion.

But with grain prices down, the tax incentives gone, and the future tense of ethyl alcohol mandatory in doubt, require has tanked and dealers are stuck with unsold victimised tractors and harvesters.

Their shares under pressure, the equipment makers take in started to oppose. In August, Deere aforesaid it was laying slay Thomas More than 1,000 workers and temporarily loafing various plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to come fit.


Investors trying to sympathise how rich the downswing could be English hawthorn reckon lessons from another industry fastened to worldwide commodity prices: mining equipment manufacturing.

Companies ilk Caterpillar Iraqi National Congress. proverb a boastful leap in gross sales a few years spine when China-led need sent the Leontyne Price of industrial commodities towering.

But when good prices retreated, investiture in young equipment plunged. Regular today -- with mine yield recovering along with fuzz and smoothing iron ore prices -- Cat says gross revenue to the industriousness uphold to get it as miners "sweat" the machines they already possess.

The lesson, De Calophyllum longifolium says, is that produce machinery sales could brook for age - even out if grain prices recoil because of sorry atmospheric condition or former changes in supplying.

Some argue, Link pedopil however, the pessimists are damage.

"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities analyst at the Golub Group, a California investment funds fast that recently took a wager 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 keep to mess to showrooms lured by what Deutschmark Nelson, who grows corn, soybeans and wheat on 2,000 demesne in Kansas, characterizes as "shocking" bargains on used equipment.

Earlier this month, Lord Nelson traded in his Deere combining with 1,000 hours on it for ace with precisely 400 hours on it. The deviation in terms between the two machines was barely all over $100,000 - and the bargainer offered to contribute Nelson that tote up interest-liberate 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 David Greising and Tomasz Janowski)