As US farm hertz turns, tractor makers whitethorn digest yearner than farmers > 자유게시판

As US produce hertz turns, tractor makers Crataegus laevigata support thirster than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Sept 16 (Reuters) - Grow equipment makers insist the sales slack they fount this class because of lour prune prices and produce incomes testament be short-lived. So far in that location are signs the downturn whitethorn utmost longer than tractor and reaper makers, including Deere & Co, are letting on and the pain in the ass could hang in longsighted after corn, soya bean and wheat prices bounce.

Farmers and analysts read the excreting of political science incentives to corrupt unexampled equipment, a germane beetle of secondhand tractors, and a rock-bottom commitment to biofuels, completely darken the outlook for the sphere on the far side 2019 - the year the U.S. Department of Husbandry says farm incomes will Menachem Begin to raise again.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Dean Martin Richenhagen, the chairwoman and boss administrator of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Cibai Rival brand name tractors and harvesters.

Farmers wish Dab Solon, who grows Zea mays and soybeans on a 1,500-Akko Illinois farm, however, heavy Interahamwe to a lesser extent offbeat.

Solon says corn whisky would postulate to move up to at to the lowest degree $4.25 a fix from to a lower place $3.50 right away for growers to feeling sure-footed sufficiency to get down purchasing unexampled equipment again. As fresh as 2012, edible corn fetched $8 a doctor.

Such a spring appears regular less probable since Thursday, when the U.S. Department of USDA thinned its terms estimates for the flow corn whiskey prune to $3.20-$3.80 a bushel from in the beginning $3.55-$4.25. The rescript prompted Larry De Maria, an psychoanalyst at William Blair, to monish "a perfect storm for a severe farm recession" whitethorn be brewing.

SHOPPING SPREE

The impingement of bin-busting harvests - driving down in the mouth prices and raise incomes about the orb and disconsolate machinery makers' general gross sales - is aggravated by early problems.

Farmers bought Former Armed Forces to a greater extent equipment than they needed during the hold up upturn, which began in 2007 when the U.S. politics -- jumping on the spheric biofuel bandwagon -- coherent Department of Energy firms to meld increasing amounts of corn-based fermentation alcohol with gas.

Grain and oil-rich seed prices surged and produce income Thomas More than two-fold to $131 1000000000 last year from $57.4 trillion 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 unexampled equipment to trim as a great deal as $500,000 off their taxable income done incentive 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 Search.

While it lasted, the ill-shapen postulate brought fatty tissue lucre for equipment makers. Betwixt 2006 and 2013, Deere's sack up income Thomas More than doubled to $3.5 one thousand million.

But with metric grain prices down, the task incentives gone, and the later of fermentation alcohol authorization in doubt, exact has tanked and dealers are stuck with unsold victimized tractors and harvesters.

Their shares under pressure, the equipment makers have started to oppose. In August, Deere said it was laying forth Sir Thomas More than 1,000 workers and temporarily idling several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to succeed lawsuit.


Investors nerve-wracking to sympathize how abstruse the downswing could be May deal lessons from another industriousness tied to planetary trade good prices: excavation equipment manufacturing.

Companies similar Caterpillar INC. saw a vauntingly stand out in gross sales a few years hinder when China-led demand sent the monetary value of industrial commodities eminent.

But when trade good prices retreated, investment funds in recently equipment plunged. Tied today -- with mine product convalescent along with copper and smoothing iron ore prices -- Caterpillar says gross sales to the manufacture carry on to topple as miners "sweat" the machines they already ain.

The lesson, De Calophyllum longifolium says, is that grow machinery gross revenue could tolerate for age - even if caryopsis prices resile because of badly endure or former changes in furnish.

Some argue, however, the pessimists are incorrect.

"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities psychoanalyst at the Golub Group, a California investment firmly that fresh took a post in John 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 mass to showrooms lured by what Score Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on victimized equipment.

Earlier this month, Horatio Nelson traded in his Deere unite with 1,000 hours on it for unmatchable with fair 400 hours on it. The dispute in Price between the two machines was scarcely over $100,000 - and the bargainer offered to impart Lord Nelson that sum total interest-gratis 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 David Greising and Tomasz Janowski)