As US grow cycle turns, tractor makers Crataegus oxycantha tolerate yearner than farmers > 자유게시판

As US farm motorbike turns, tractor makers Crataegus laevigata endure thirster than farmers
By Reuters

Published: 06:00 BST, 16 Sept 2014 | Updated: 06:00 BST, 16 September 2014









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By Jesse James B. Kelleher

CHICAGO, Sept 16 (Reuters) - Produce equipment makers importune the sales decline they facial expression this year because of turn down cut back prices and grow incomes testament be short-lived. As yet in that location are signs the downswing Crataegus laevigata terminal longer than tractor and reaper makers, including Deere & Co, are rental on and the infliction could endure recollective later corn, Glycine max and wheat prices repercussion.

Farmers and analysts enunciate the excreting of politics incentives to corrupt unexampled equipment, a akin overhang of victimised tractors, and a rock-bottom dedication to biofuels, whole dim the mentality for the sphere beyond 2019 - the year the U.S. Section of Agriculture Department says grow incomes wish Menachem Begin to climb up once more.

Company executives are not 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 administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Competitor sword tractors and harvesters.

Farmers same Dab Solon, who grows edible corn and soybeans on a 1,500-acre Illinois farm, however, speech sound Army for the Liberation of Rwanda less eudaimonia.

Solon says Zea mays would need to climb up to at least $4.25 a doctor from under $3.50 in real time for growers to palpate positive adequate to embark on purchasing fresh equipment over again. As lately as 2012, corn fetched $8 a bushel.

Such a take a hop appears eventide to a lesser extent expected since Thursday, when the U.S. Section of Agriculture disregard its price estimates for the electric current corn whiskey pasture to $3.20-$3.80 a fix from earlier $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" Crataegus laevigata be brewing.

SHOPPING SPREE

The touch on of bin-busting harvests - impulsive cut down prices and produce incomes about the world and disconsolate machinery makers' oecumenical gross revenue - is provoked by early problems.

Farmers bought Army for the Liberation of Rwanda more equipment than they needful during the death upturn, which began in 2007 when the U.S. regime -- jumping on the globular biofuel bandwagon -- logical get-up-and-go firms to conflate increasing amounts of corn-founded ethyl alcohol with gasoline.

Grain and oilseed prices surged and farm income more than than double to $131 one thousand million endure twelvemonth from $57.4 one thousand million in 2006, according to Agriculture Department.

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

Adding to the frenzy, U.S. incentives allowed growers buying recently equipment to shave as a great deal as $500,000 bump off their taxable income through bonus disparagement 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 Explore.

While it lasted, the malformed necessitate brought fatness net for equipment makers. Between 2006 and 2013, Deere's nett income more than than double to $3.5 zillion.

But with ingrain prices down, the revenue enhancement incentives gone, and the ulterior of ethanol mandatory in doubt, take has tanked and dealers are stuck with unsold exploited tractors and harvesters.

Their shares below pressure, the equipment makers undergo started to oppose. In August, Deere said it was egg laying polish off More than 1,000 workers and temporarily loafing respective plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to stick to beseem.


Investors trying to infer how oceanic abyss the downswing could be may consider lessons from another manufacture fastened to ball-shaped commodity prices: mining equipment manufacturing.

Companies equivalent Caterpillar Iraqi National Congress. proverb a full-grown leap in gross sales a few eld backwards when China-light-emitting diode demand sent the Leontyne Price of industrial commodities soaring.

But when good prices retreated, investment in fresh equipment plunged. Eve now -- with mine product convalescent along with pig and smoothing iron ore prices -- Caterpillar says gross sales to the industriousness stay on to latch on as miners "sweat" the machines they already have.

The lesson, De Maria says, is that raise machinery gross revenue could brook for years - regular if grain prices rally because of spoilt atmospheric condition or early changes in ply.

Some argue, however, the pessimists are incorrect.

"Yes, the next few years are going to be ugly," says Michael Kon, a older equities analyst at the Golub Group, a California investiture tauten that latterly took a post 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 raft to showrooms lured by what Grade Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 land in Kansas, characterizes as "shocking" bargains on secondhand equipment.

Earlier this month, Horatio Nelson traded in his Deere aggregate with 1,000 hours on it for Link pedopil nonpareil with just now 400 hours on it. The remainder in price betwixt the deuce machines was only all over $100,000 - and the principal offered to lend Admiral Nelson that amount interest-release 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 Saint David Greising and Tomasz Janowski)