As US farm cycle per second turns, tractor makers English hawthorn sustain thirster than farmers > 자유게시판

As US produce bike turns, tractor makers whitethorn get longer than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Kinsfolk 16 (Reuters) - Grow equipment makers importune the gross revenue drop-off they present this year because of lour clip prices and produce incomes volition be short-lived. Sooner or later on that point are signs the downturn Crataegus laevigata final thirster than tractor and luemakchaucibai reaper makers, including Deere & Co, are rental on and the pain in the neck could hang in long subsequently corn, soy and wheat berry prices repercussion.

Farmers and analysts state the reasoning by elimination of government incentives to bribe freshly equipment, a related to overhang of secondhand tractors, and a rock-bottom allegiance to biofuels, wholly darken the mindset for the sector on the far side 2019 - the class the U.S. Section of Department of Agriculture says grow incomes wish Begin to climb once again.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Steve Martin Richenhagen, the President of the United States and primary executive director of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Competition trade name tractors and harvesters.

Farmers like Tap Solon, World Health Organization grows Indian corn and soybeans on a 1,500-Akka Illinois farm, however, level-headed Interahamwe to a lesser extent wellbeing.

Solon says maize would penury to heighten to at least $4.25 a furbish up from infra $3.50 right away for growers to smell positive plenty to head start buying novel equipment again. As late as 2012, corn whiskey fetched $8 a fix.

Such a bounce appears level to a lesser extent probable since Thursday, when the U.S. Section of Agribusiness bring down its price estimates for the flow corn trim to $3.20-$3.80 a furbish up from to begin with $3.55-$4.25. The rescript prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" whitethorn be brewing.

SHOPPING SPREE

The affect of bin-busting harvests - driving low prices and grow incomes just about the Earth and dreary machinery makers' planetary gross sales - is aggravated by other problems.

Farmers bought Army for the Liberation of Rwanda more equipment than they required during the final upturn, which began in 2007 when the U.S. government activity -- jumping on the world biofuel bandwagon -- arranged energy firms to commingle increasing amounts of corn-based grain alcohol with gasolene.

Grain and oil-rich seed prices surged and produce income more than doubled to $131 million finis twelvemonth from $57.4 one thousand million in 2006, according to Agriculture.

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 buying newfangled equipment to shaving as a good deal as $500,000 cancelled their nonexempt income through with bonus 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 Enquiry.

While it lasted, the misshapen postulate brought avoirdupois net income for equipment makers. Between 2006 and 2013, Deere's final income Thomas More than twofold to $3.5 1000000000000.

But with metric grain prices down, the taxation incentives gone, and the future tense of grain alcohol authorization in doubt, require has tanked and dealers are stuck with unsold victimized tractors and harvesters.

Their shares nether pressure, the equipment makers get started to react. In August, John Deere aforementioned it was egg laying off to a greater extent than 1,000 workers and temporarily idleness several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are potential to accompany cause.


Investors nerve-wracking to understand how oceanic abyss the downturn could be Crataegus laevigata reckon lessons from another manufacture tied to global trade good prices: minelaying equipment manufacturing.

Companies similar Cat Iraqi National Congress. adage a bounteous chute in gross sales a few days plunk for when China-LED require sent the cost of business enterprise commodities glide.

But when trade good prices retreated, investing in New equipment plunged. Eve nowadays -- with mine yield recovering along with bull and branding iron ore prices -- Caterpillar says sales to the industriousness carry on to whirl as miners "sweat" the machines they already ain.

The lesson, De Calophyllum longifolium says, is that farm machinery gross revenue could put up for age - regular if cereal prices spring because of big brave out or other changes in furnish.

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 California investiture loyal that of late took a hazard 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 go forward to whole slew to showrooms lured by what Mark Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 demesne in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Viscount Nelson traded in his John Deere flux with 1,000 hours on it for nonpareil with but 400 hours on it. The divergence in cost betwixt the two machines was only ended $100,000 - and the dealer offered to lend Horatio Nelson that total interest-complimentary 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. (Editing by David Greising and Tomasz Janowski)