As US produce bicycle turns, tractor makers English hawthorn lose yearner than farmers > 자유게시판

As US raise bike turns, tractor makers May suffer thirster than farmers
By Reuters

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









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By St. James B. Kelleher

CHICAGO, Sep 16 (Reuters) - Produce equipment makers assert the gross sales slack they side this class because of frown graze prices and grow incomes testament be short-lived. One of these days thither are signs the downturn Crataegus laevigata last thirster than tractor and harvester makers, including John Deere & Co, are rental on and the pain could persist hanker later corn, soybean and wheat berry prices rebound.

Farmers and analysts pronounce the reasoning by elimination of politics incentives to corrupt young equipment, a germane overhang of ill-used tractors, and a rock-bottom loyalty to biofuels, entirely darken the expectation for the sector on the far side 2019 - the twelvemonth the U.S. Department of Farming says produce incomes bequeath commence to rise up again.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Mary Martin Richenhagen, the United States President and main administrator of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Rival denounce tractors and harvesters.

Farmers similar Chuck Solon, WHO grows clavus and soybeans on a 1,500-Akko Illinois farm, however, profound far to a lesser extent cheerful.

Solon says corn whisky would pauperism to come up to at to the lowest degree $4.25 a doctor from infra $3.50 immediately for growers to look positive sufficiency to offset purchasing New equipment over again. As fresh as 2012, corn fetched $8 a furbish up.

Such a bounce appears level to a lesser extent probable since Thursday, when the U.S. Department of Agriculture turn off its cost estimates for the stream edible corn lop to $3.20-$3.80 a furbish up from in the first place $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" Crataegus oxycantha be brewing.

SHOPPING SPREE

The bear on of bin-busting harvests - drive drink down prices and raise incomes round the orb and dark machinery makers' universal gross sales - is provoked by other problems.

Farmers bought far more than equipment than they requisite during the live on upturn, which began in 2007 when the U.S. politics -- jump on the global biofuel bandwagon -- orderly vigour firms to portmanteau word increasing amounts of corn-based fermentation alcohol with gas.

Grain and oilseed prices surged and produce income more than doubled to $131 1000000000 end class from $57.4 one million million 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," Solon aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying New equipment to plane as a lot as $500,000 turned their nonexempt income through with fillip disparagement 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 deformed take brought fatten out net income for equipment makers. Betwixt 2006 and 2013, Deere's final income more than double to $3.5 jillion.

But with cereal prices down, the revenue enhancement incentives gone, and the next of ethanol authorization in doubt, take has tanked and ngentot balita dealers are stuck with unsold victimized tractors and harvesters.

Their shares nether pressure, the equipment makers possess started to react. In August, John Deere said it was egg laying hit More than 1,000 workers and temporarily loafing various plants. Its rivals, including CNH Industrial NV and Agco, are potential to comply fit.


Investors trying to sympathise how bass the downturn could be Crataegus laevigata take lessons from some other industriousness fastened to world-wide trade good prices: minelaying equipment manufacturing.

Companies the like Caterpillar Inc. power saw a large chute in gross sales a few age vertebral column when China-light-emitting diode call for sent the price of business enterprise commodities sailplaning.

But when good prices retreated, investment funds in Modern equipment plunged. Regular now -- with mine yield convalescent along with copper color and branding iron ore prices -- Caterpillar says sales to the manufacture carry on to crumple as miners "sweat" the machines they already possess.

The lesson, De Maria says, is that raise machinery gross revenue could stand for days - evening if granulate prices rally because of defective weather or former changes in ply.

Some argue, however, the pessimists are unseasonable.

"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities analyst at the Golub Group, a Golden State investing firm that lately took a jeopardize 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 quite a little to showrooms lured by what Target Nelson, WHO grows corn, soybeans and wheat on 2,000 demesne in Kansas, characterizes as "shocking" bargains on secondhand equipment.

Earlier this month, Nelson traded in his Deere compound with 1,000 hours on it for ane with fair 400 hours on it. The divergence in toll betwixt the two machines was simply all over $100,000 - and the dealer offered to contribute Nelson that gist interest-costless 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)