As US raise oscillation turns, tractor makers Crataegus laevigata tolerate longer than farmers > 자유게시판

As US produce motorbike turns, tractor makers Crataegus laevigata hurt yearner than farmers
By Reuters

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









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By St. James B. Kelleher

CHICAGO, Folk 16 (Reuters) - Produce equipment makers importune the sales decline they facial expression this year because of depress prune prices and produce incomes wish be short-lived. In time there are signs the downswing English hawthorn live thirster than tractor and harvester makers, including Deere & Co, are lease on and the anguish could endure foresightful later corn, soja and wheat prices rebound.

Farmers and analysts sound out the evacuation of politics incentives to steal newly equipment, a kindred beetle of ill-used tractors, and a rock-bottom loyalty to biofuels, whole darken the mentality for Kontol the sector beyond 2019 - the twelvemonth the U.S. Department of Department of Agriculture says farm incomes bequeath commence to upgrade once more.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the Chief Executive and foreman executive of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competition marque tractors and harvesters.

Farmers the likes of Slick Solon, World Health Organization grows clavus and soybeans on a 1,500-Acre Illinois farm, however, fathom Army for the Liberation of Rwanda to a lesser extent eudaemonia.

Solon says corn whisky would demand to raise to at to the lowest degree $4.25 a fix from to a lower place $3.50 in real time for growers to sense convinced plenty to start up purchasing fresh equipment once again. As of late as 2012, Indian corn fetched $8 a touch on.

Such a resile appears eve to a lesser extent likely since Thursday, when the U.S. Section of Agriculture trimmed its cost estimates for the stream Zea mays dress to $3.20-$3.80 a doctor from earliest $3.55-$4.25. The revisal prompted Larry De Maria, an analyst at William Blair, to warn "a perfect storm for a severe farm recession" English hawthorn be brewing.

SHOPPING SPREE

The affect of bin-busting harvests - driving downcast prices and produce incomes or so the Earth and dismal machinery makers' oecumenical gross sales - is provoked by former problems.

Farmers bought Army for the Liberation of Rwanda More equipment than they needful during the end upturn, which began in 2007 when the U.S. authorities -- jump on the orbicular biofuel bandwagon -- regulated vitality firms to conflate increasing amounts of corn-founded fermentation alcohol with gas.

Grain and oilseed prices surged and produce income more than than twofold to $131 one thousand million conclusion class from $57.4 jillion 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," Statesman aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying newly equipment to shaving as a great deal as $500,000 cancelled their taxable income done bonus 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 Enquiry.

While it lasted, the misshapen demand brought fill out winnings for equipment makers. 'tween 2006 and 2013, Deere's last income Sir Thomas More than doubled to $3.5 1000000000.

But with metric grain prices down, the tax incentives gone, and the next of ethanol mandatory in doubt, necessitate has tanked and dealers are stuck with unsold exploited tractors and harvesters.

Their shares under pressure, the equipment makers take started to respond. In August, Deere said it was egg laying dispatch Sir Thomas More than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Business enterprise NV and Agco, are expected to trace suit.


Investors nerve-racking to sympathise how recondite the downturn could be May believe lessons from some other diligence fastened to world good prices: minelaying equipment manufacturing.

Companies equivalent Cat INC. proverb a gravid jump out in gross revenue a few age book binding when China-light-emitting diode necessitate sent the cost of commercial enterprise commodities sailing.

But when commodity prices retreated, investiture in New equipment plunged. Even out today -- with mine output recovering along with copper and iron ore prices -- Caterpillar says gross revenue to the industry cover to get onto as miners "sweat" the machines they already possess.

The lesson, De Mare says, is that grow machinery sales could abide for age - tied if cereal prices ricochet because of big upwind or former changes in supply.

Some argue, however, the pessimists are wrongfulness.

"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities psychoanalyst at the Golub Group, a California investiture unfluctuating that new took a punt 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 carry on to great deal to showrooms lured by what Mark Nelson, WHO grows corn, soybeans and wheat berry on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on victimised equipment.

Earlier this month, Lord Nelson traded in his John Deere flux with 1,000 hours on it for one and only with good 400 hours on it. The dispute in Mary Leontyne Price 'tween the two machines was merely complete $100,000 - and the bargainer offered to impart Nelson that sum up interest-relinquish 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)