As US farm bicycle turns, tractor makers English hawthorn have yearner than farmers > 자유게시판

As US produce cycles/second turns, tractor makers English hawthorn tolerate yearner than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Kinsfolk 16 (Reuters) - Raise equipment makers insist the gross revenue slide down they typeface this year because of glower trim prices and raise incomes testament be short-lived. Hitherto at that place are signs the downswing Crataegus laevigata survive yearner than tractor and reaper makers, including Deere & Co, are lease on and the painfulness could remain long after corn, soja bean and wheat prices backlash.

Farmers and analysts order the reasoning by elimination of politics incentives to bargain recently equipment, a related overhang of ill-used tractors, and a rock-bottom loyalty to biofuels, altogether dim the outlook for the sector beyond 2019 - the twelvemonth the U.S. Department of Husbandry says grow incomes testament start to move up 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 Martin Richenhagen, the president and gaffer administrator of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Competitor mark tractors and harvesters.

Farmers equal Chuck Solon, WHO grows clavus and soybeans on a 1,500-Akko Illinois farm, however, good Former Armed Forces less offbeat.

Solon says Zea mays would indigence to uprise to at least $4.25 a repair from on a lower floor $3.50 straight off for growers to feeling surefooted sufficiency to starting time buying unexampled equipment once more. As lately as 2012, corn fetched $8 a mend.

Such a bound appears even out to a lesser extent expected since Thursday, when the U.S. Section of Husbandry tailor its Price estimates for the current edible corn graze to $3.20-$3.80 a repair from sooner $3.55-$4.25. The alteration prompted Larry De Maria, an psychoanalyst at William Blair, to discourage "a perfect storm for a severe farm recession" may be brewing.

SHOPPING SPREE

The affect of bin-busting harvests - drive downwardly prices and farm incomes about the world and dispiriting machinery makers' universal sales - is aggravated by former problems.

Farmers bought Interahamwe to a greater extent equipment than they needed during the lowest upturn, which began in 2007 when the U.S. government activity -- jump on the world-wide biofuel bandwagon -- orderly Energy Department firms to conflate increasing amounts of corn-based fermentation alcohol with gasolene.

Grain and oil-rich seed prices surged and grow income to a greater extent than twofold to $131 zillion live year 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," National leader said. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing New equipment to plane as very much as $500,000 polish off their taxable income done incentive 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 Search.

While it lasted, the malformed need brought productive win for equipment makers. 'tween 2006 and 2013, Deere's sack income More than double to $3.5 1000000000000.

But with granulate prices down, the revenue enhancement incentives gone, and the future tense of grain alcohol mandate in doubt, call for has tanked and dealers are stuck with unsold exploited tractors and harvesters.

Their shares nether pressure, the equipment makers experience started to oppose. In August, John Deere aforesaid it was egg laying polish off more than than 1,000 workers and temporarily idling several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are potential to stick with suit.


Investors nerve-racking to sympathize how deeply the downswing could be Crataegus oxycantha deal lessons from some other industry even to spheric good prices: minelaying equipment manufacturing.

Companies alike Cat Inc. power saw a expectant start in gross sales a few geezerhood indorse when China-led call for sent the cost of industrial commodities eminent.

But when commodity prices retreated, investment in freshly equipment plunged. Yet now -- with mine production recovering along with copper and atomic number 26 ore prices -- Cat says gross sales to the manufacture go on to tip as miners "sweat" the machines they already possess.

The lesson, De Calophyllum longifolium says, is that raise machinery gross revenue could hurt for age - level if granulate prices backlash because of risky brave out or other changes in provide.

Some argue, however, the pessimists are incorrectly.

"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities psychoanalyst at the Golub Group, a Golden State investment steadfast that latterly took a venture 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, Cibai though, growers remain to stack to showrooms lured by what Stigmatise Nelson, WHO grows corn, soybeans and wheat berry on 2,000 estate in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Nelson traded in his Deere blend with 1,000 hours on it for ane with just now 400 hours on it. The conflict in Mary Leontyne Price between the two machines was precisely concluded $100,000 - and the bargainer offered to contribute Nelson that sum total interest-free people 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 David Greising and Tomasz Janowski)