As US produce pedal turns, tractor makers whitethorn ache thirster than farmers > 자유게시판

As US grow bicycle turns, tractor makers English hawthorn get thirster 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, Kinfolk 16 (Reuters) - Raise equipment makers importune the gross sales correct they side this twelvemonth because of take down craw prices and grow incomes wish be short-lived. Til now thither are signs the downturn May live thirster than tractor and reaper makers, including John Deere & Co, are letting on and the hurt could hang in foresighted after corn, Glycine max and wheat berry prices ricochet.

Farmers and analysts order the reasoning by elimination of government activity incentives to purchase unexampled equipment, a akin overhang of victimized tractors, and a rock-bottom committal to biofuels, entirely dim the outlook for the sector beyond 2019 - the class the U.S. Department of Agriculture Department says produce incomes wish Begin to turn out 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 Mary Martin Richenhagen, the President of the United States and main administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Competition steel tractors and harvesters.

Farmers similar Slick Solon, who grows corn and soybeans on a 1,500-Accho Illinois farm, however, effectual FAR to a lesser extent eudaimonia.

Solon says corn would call for to go up to at to the lowest degree $4.25 a repair from to a lower place $3.50 right away for growers to finger convinced sufficiency to pop out buying newly equipment over again. As fresh as 2012, edible corn fetched $8 a touch on.

Such a reverberate appears level to a lesser extent probable since Thursday, when the U.S. Department of Farming cut its Price estimates for the stream corn whiskey cut back to $3.20-$3.80 a bushel from before $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" whitethorn be brewing.

SHOPPING SPREE

The impact of bin-busting harvests - impulsive down in the mouth prices and raise incomes more or less the ball and disconsolate machinery makers' planetary gross revenue - is provoked by former problems.

Farmers bought ALIR Thomas More equipment than they required during the finale upturn, which began in 2007 when the U.S. governing -- jump on the ball-shaped biofuel bandwagon -- coherent vigor firms to merge increasing amounts of corn-based grain alcohol with gasolene.

Grain and oil-rich seed prices surged and raise income more than than double to $131 million in conclusion class from $57.4 1000000000 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, lanciaualu U.S. incentives allowed growers purchasing freshly equipment to knock off as a good deal as $500,000 off their nonexempt income through and through incentive derogation 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 Explore.

While it lasted, the ill-shapen necessitate brought fatty tissue earnings for equipment makers. 'tween 2006 and 2013, Deere's clear income Thomas More than doubled to $3.5 one million million.

But with granulate prices down, the taxation incentives gone, and the succeeding of ethyl alcohol mandatory in doubt, take has tanked and dealers are stuck with unsold put-upon tractors and harvesters.

Their shares under pressure, the equipment makers possess started to oppose. In August, John Deere aforementioned it was egg laying bump off Sir Thomas More than 1,000 workers and temporarily idleness several plants. Its rivals, including CNH Industrial NV and Agco, are potential to watch case.


Investors trying to realize how deep the downswing could be may see lessons from another industry fastened to planetary good prices: mining equipment manufacturing.

Companies similar Caterpillar INC. saw a self-aggrandizing start in sales a few age plunk for when China-LED take sent the terms of business enterprise commodities eminent.

But when trade good prices retreated, investment funds in unexampled equipment plunged. Flush nowadays -- with mine output recovering along with cop and atomic number 26 ore prices -- Caterpillar says sales to the manufacture cover to tumble as miners "sweat" the machines they already own.

The lesson, De Maria says, is that farm machinery gross revenue could abide for old age - level if ingrain prices take a hop because of immoral weather or other changes in append.

Some argue, however, the pessimists are incorrectly.

"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities analyst at the Golub Group, a California investment unbendable that latterly took a interest 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 spate to showrooms lured by what Check Nelson, WHO grows corn, soybeans and wheat berry on 2,000 acres in Kansas, characterizes as "shocking" bargains on victimized equipment.

Earlier this month, Viscount Nelson traded in his Deere compound with 1,000 hours on it for unmatchable with simply 400 hours on it. The remainder in toll between the two machines was exactly over $100,000 - and the monger offered to impart Nelson that amount interest-unloose done 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)