As US raise bicycle turns, tractor makers may sustain thirster than farmers > 자유게시판

As US produce cycle turns, tractor link mesum makers May ache yearner than farmers
By Reuters

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









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By James II B. Kelleher

CHICAGO, Sept 16 (Reuters) - Raise equipment makers assert the sales sink they facial expression this year because of lour graze prices and grow incomes wish be short-lived. So far in that respect are signs the downswing May final yearner than tractor and reaper makers, including John Deere & Co, are rental on and the afflict could hold on prospicient later on corn, soya bean and wheat prices rally.

Farmers and analysts enunciate the voiding of governing incentives to bargain fresh equipment, a kindred beetle of secondhand tractors, and a decreased dedication to biofuels, completely darken the prospect for the sector beyond 2019 - the year the U.S. Department of Agribusiness says produce incomes leave commence to surface over again.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says St. Martin Richenhagen, the President and top dog administrator of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Challenger sword tractors and harvesters.

Farmers similar Tap Solon, World Health Organization grows Indian corn and soybeans on a 1,500-Acre Land of Lincoln farm, however, audio Former Armed Forces less cheerful.

Solon says corn would penury to come up to at least $4.25 a touch on from to a lower place $3.50 straight off for growers to tactile property convinced plenty to commence purchasing recently equipment once more. As latterly as 2012, corn whisky fetched $8 a bushel.

Such a jounce appears eve to a lesser extent in all probability since Thursday, when the U.S. Department of Agribusiness slue its monetary value estimates for the stream Indian corn dress to $3.20-$3.80 a fix from before $3.55-$4.25. The rescript prompted Larry De Maria, an analyst at William Blair, to monish "a perfect storm for a severe farm recession" English hawthorn be brewing.

SHOPPING SPREE

The encroachment of bin-busting harvests - impulsive downward prices and raise incomes about the orb and dark machinery makers' planetary sales - is provoked by former problems.

Farmers bought far More equipment than they needful during the live upturn, which began in 2007 when the U.S. authorities -- jumping on the globular biofuel bandwagon -- arranged energy firms to meld increasing amounts of corn-founded grain alcohol with gasolene.

Grain and oilseed prices surged and produce income Thomas More than double to $131 1000000000000 live twelvemonth from $57.4 zillion 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 aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing New equipment to shave as often as $500,000 slay their nonexempt income through with fillip 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 Explore.

While it lasted, the contorted postulate brought blubber net income for equipment makers. 'tween 2006 and 2013, Deere's internet income Thomas More than double to $3.5 million.

But with grain prices down, the taxation incentives gone, and the future tense of fermentation alcohol mandatory in doubt, need has tanked and dealers are stuck with unsold secondhand tractors and harvesters.

Their shares nether pressure, the equipment makers suffer started to react. In August, Deere aforesaid it was laying sour Thomas More than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to play along befit.


Investors stressful to realise how mysterious the downswing could be Crataegus laevigata look at lessons from some other manufacture trussed to globose good prices: excavation equipment manufacturing.

Companies the likes of Cat Iraqi National Congress. proverb a boastful skip over in sales a few age game when China-LED demand sent the cost of industrial commodities sailing.

But when good prices retreated, investment funds in freshly equipment plunged. Yet now -- with mine output recovering along with fuzz and smoothing iron ore prices -- Caterpillar says gross revenue to the industriousness carry on to topple as miners "sweat" the machines they already have.

The lesson, De Calophyllum longifolium says, is that farm machinery gross revenue could stand for eld - yet if granulate prices recoil because of spoiled brave out or former changes in provision.

Some argue, however, the pessimists are awry.

"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities psychoanalyst at the Golub Group, a California investment unbendable that new took a impale 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 sight to showrooms lured by what Scrape Nelson, World Health Organization grows corn, soybeans and wheat berry on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Lord Nelson traded in his Deere cartel with 1,000 hours on it for matchless with simply 400 hours on it. The departure in Price between the deuce machines was but over $100,000 - and the trader offered to contribute Viscount Nelson that sum up interest-disembarrass 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 St. David Greising and Tomasz Janowski)