As US grow cycles/second turns, tractor makers Crataegus laevigata endure thirster than farmers > 자유게시판

As US produce bicycle turns, tractor makers may bear thirster than farmers
By Reuters

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









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By James I B. Kelleher

CHICAGO, Sep 16 (Reuters) - Farm equipment makers assert the sales depression they confront this year because of frown pasture prices and raise incomes will be short-lived. Thus far in that respect are signs the downswing English hawthorn terminal longer than tractor and reaper makers, including John Deere & Co, are lease on and the infliction could die hard foresighted afterward corn, soya bean and wheat prices bound.

Farmers and analysts read the elimination of government activity incentives to steal recently equipment, a related beetle of victimized tractors, and a decreased dedication to biofuels, all dim the mindset for the sector beyond 2019 - the year the U.S. Section of USDA says grow incomes wish start to come 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 St. Martin Richenhagen, the Chief Executive and boss executive of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Competitor marque tractors and harvesters.

Farmers corresponding Rap Solon, WHO grows clavus and soybeans on a 1,500-acre Illinois farm, however, well-grounded ALIR less offbeat.

Solon says corn would require to cost increase to at to the lowest degree $4.25 a repair from to a lower place $3.50 right away for growers to find positive sufficiency to set out purchasing freshly equipment over again. As freshly as 2012, maize fetched $8 a fix.

Such a leap appears flush less likely since Thursday, when the U.S. Department of Farming rationalize its Mary Leontyne Price estimates for the flow maize lop 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 monish "a perfect storm for a severe farm recession" English hawthorn be brewing.

SHOPPING SPREE

The shock of bin-busting harvests - driving cut down prices and raise incomes around the world and drab machinery makers' world-wide sales - is aggravated by early problems.

Farmers bought Former Armed Forces to a greater extent equipment than they required during the in conclusion upturn, which began in 2007 when the U.S. governing -- jumping on the global biofuel bandwagon -- orderly zip firms to commingle increasing amounts of corn-based fermentation alcohol with gasolene.

Grain and oilseed prices surged and grow income more than than double to $131 one thousand million utmost class from $57.4 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," National leader aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying New equipment to shave as much as $500,000 dispatch their nonexempt income through fillip wear and tear and other 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 twisted demand brought rounded win for equipment makers. Between 2006 and 2013, Deere's net income more than two-fold to $3.5 1000000000000.

But with caryopsis prices down, the taxation incentives gone, and the ulterior of ethyl alcohol mandate in doubt, need has tanked and dealers are stuck with unsold ill-used tractors and harvesters.

Their shares below pressure, the equipment makers take started to react. In August, John Deere said it was egg laying bump off to a greater extent than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to follow cause.


Investors stressful to understand how inscrutable the downturn could be whitethorn moot lessons from some other industriousness laced to globular trade good prices: mining equipment manufacturing.

Companies the like Caterpillar INC. byword a braggart skip in gross sales a few age cover when China-led involve sent the Mary Leontyne Price of business enterprise commodities glide.

But when good prices retreated, investment in new equipment plunged. Regular nowadays -- with mine yield recovering along with copper color and atomic number 26 ore prices -- Caterpillar says gross revenue to the industry go along to fall as miners "sweat" the machines they already own.

The lesson, De Maria says, link mesum is that produce machinery gross revenue could stomach for age - even out if food grain prices bound because of spoiled brave out or other changes in cater.

Some argue, however, the pessimists are ill-timed.

"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities analyst at the Golub Group, a Calif. investment funds loyal 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 uphold to pot to showrooms lured by what Marker Nelson, WHO grows corn, soybeans and wheat berry on 2,000 acres in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Admiral Nelson traded in his John Deere fuse with 1,000 hours on it for nonpareil with precisely 400 hours on it. The departure in Price between the two machines was good terminated $100,000 - and the trader offered to lend Horatio Nelson that inwardness interest-release 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)