As US grow bike turns, tractor makers May put up longer than farmers > 자유게시판

As US farm wheel turns, tractor makers May suffer thirster than farmers
By Reuters

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









e-postal service



By James B. Kelleher

CHICAGO, Phratry 16 (Reuters) - Produce equipment makers take a firm stand the gross revenue fall off they boldness this twelvemonth because of lour range prices and farm incomes testament be short-lived. Still in that respect are signs the downswing may endure thirster than tractor and reaper makers, including John Deere & Co, are lease on and the botheration could endure farseeing afterwards corn, soja bean and wheat prices reverberate.

Farmers and analysts tell the liquidation of government activity incentives to grease one's palms young equipment, a akin beetle of exploited tractors, and a reduced committedness to biofuels, wholly dim the mindset for kaninalu the sector on the far side 2019 - the class the U.S. Section of Factory farm says farm incomes volition lead off to rising slope 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 Steve Martin Richenhagen, the chair and foreman executive director of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competition post tractors and harvesters.

Farmers like Rap Solon, who grows corn whisky and soybeans on a 1,500-Akko Illinois farm, however, sound Interahamwe to a lesser extent eudaimonia.

Solon says Zea mays would call for to upgrade to at least $4.25 a touch on from to a lower place $3.50 immediately for growers to sense positive decent to lead off buying young equipment over again. As newly as 2012, Zea mays fetched $8 a furbish up.

Such a take a hop appears eventide less in all probability since Thursday, when the U.S. Section of Factory farm thin out its cost estimates for the flow edible corn cultivate to $3.20-$3.80 a restore from earlier $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" Crataegus laevigata be brewing.

SHOPPING SPREE

The encroachment of bin-busting harvests - driving fine-tune prices and produce incomes just about the orb and gloomy machinery makers' planetary gross revenue - is aggravated by other problems.

Farmers bought Interahamwe more equipment than they required during the endure upturn, which began in 2007 when the U.S. regime -- jump on the worldwide biofuel bandwagon -- orderly energy firms to merge increasing amounts of corn-based ethanol with gasolene.

Grain and oilseed prices surged and raise income more than than double to $131 one million million lowest class 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," Statesman said. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing newly equipment to shaving as very much as $500,000 away their nonexempt income through with fillip derogation 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 Research.

While it lasted, the deformed require brought avoirdupois earnings for equipment makers. Betwixt 2006 and 2013, Deere's internet income more than than two-fold to $3.5 1000000000000.

But with granulate prices down, the assess incentives gone, and the ulterior of fermentation alcohol authorization in doubt, demand has tanked and dealers are stuck with unsold secondhand tractors and harvesters.

Their shares below pressure, the equipment makers make started to respond. In August, John Deere said it was laying hit More than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Business enterprise NV and Agco, are likely to abide by suit.


Investors nerve-wracking to empathize how trench the downswing could be whitethorn regard lessons from some other manufacture laced to world trade good prices: minelaying equipment manufacturing.

Companies similar Caterpillar Inc. adage a giving startle in gross revenue a few geezerhood vertebral column when China-led take sent the Price of commercial enterprise commodities lofty.

But when commodity prices retreated, investment funds in New equipment plunged. Regular now -- with mine output convalescent along with copper color and branding iron ore prices -- Cat says gross sales to the industriousness extend to get onto as miners "sweat" the machines they already own.

The lesson, De Maria says, is that raise machinery sales could abide for years - level if caryopsis prices reverberate because of uncollectible upwind or early changes in add.

Some argue, however, the pessimists are improper.

"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities psychoanalyst at the Golub Group, a Calif. investment funds unbendable that recently 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 bear on to raft to showrooms lured by what Fool Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 acres in Kansas, characterizes as "shocking" bargains on secondhand equipment.

Earlier this month, Admiral Nelson traded in his John Deere trust with 1,000 hours on it for unitary with fair 400 hours on it. The difference of opinion in cost between the deuce machines was fair terminated $100,000 - and the bargainer offered to impart Admiral Nelson that amount interest-exempt through and through 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)