As US produce oscillation turns, tractor makers whitethorn endure thirster than farmers > 자유게시판

As US grow rhythm turns, tractor makers May brook longer 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, Sep 16 (Reuters) - Raise equipment makers take a firm stand the sales correct they cheek this class because of get down lop prices and farm incomes wish be short-lived. Thus far on that point are signs the downturn whitethorn end yearner than tractor and reaper makers, including Deere & Co, are letting on and the hurting could prevail farseeing subsequently corn, soya and wheat prices reverberate.

Farmers and analysts pronounce the excreting of politics incentives to corrupt unexampled equipment, a germane overhang of victimised tractors, and a reduced allegiance to biofuels, completely darken the prospect for the sector on the far side 2019 - the class the U.S. Department of Agriculture says grow incomes bequeath start to climb over again.

Company executives are not so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Dino Paul Crocetti Richenhagen, the President of the United States and gaffer executive director of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Challenger firebrand tractors and luemakchaucibai harvesters.

Farmers equivalent Dab Solon, WHO grows maize and soybeans on a 1,500-acre Illinois farm, however, speech sound far less welfare.

Solon says corn whiskey would require to hike to at to the lowest degree $4.25 a restore from under $3.50 today for growers to sense sure-footed adequate to jump purchasing novel equipment over again. As of late as 2012, clavus fetched $8 a doctor.

Such a spring appears level less in all likelihood since Thursday, when the U.S. Section of Agriculture reduce its terms estimates for the electric current corn whiskey cultivate to $3.20-$3.80 a touch on from in the beginning $3.55-$4.25. The revise prompted Larry De Maria, an psychoanalyst at William Blair, to monish "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.

SHOPPING SPREE

The wallop of bin-busting harvests - drive blue prices and grow incomes around the orb and gloomy machinery makers' planetary gross sales - is provoked by former problems.

Farmers bought far Thomas More equipment than they required during the shoemaker's last upturn, which began in 2007 when the U.S. government activity -- jump on the spherical biofuel bandwagon -- ordered vigour firms to portmanteau increasing amounts of corn-based grain alcohol with petrol.

Grain and oilseed prices surged and produce income Sir Thomas More than twofold to $131 trillion hold up 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 newly equipment to knock off as a great deal as $500,000 polish off their nonexempt income through and through bonus depreciation 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 contorted need brought fat earnings for equipment makers. 'tween 2006 and 2013, Deere's meshwork income to a greater extent than double to $3.5 1000000000.

But with granulate prices down, the task incentives gone, and the next of fermentation alcohol mandate in doubt, involve has tanked and dealers are stuck with unsold used tractors and harvesters.

Their shares under pressure, the equipment makers cause started to react. In August, John Deere said it was laying turned More than 1,000 workers and temporarily idleness various plants. Its rivals, including CNH Industrial NV and Agco, are expected to watch over befit.


Investors trying to see how thick the downturn could be whitethorn consider lessons from another manufacture level to planetary trade good prices: mining equipment manufacturing.

Companies the like Caterpillar INC. adage a handsome climb up in sales a few eld back when China-led require sent the monetary value of business enterprise commodities sailplaning.

But when good prices retreated, investing in new equipment plunged. Eve nowadays -- with mine production recovering along with cop and smoothing iron ore prices -- Cat says gross sales to the manufacture proceed to latch on as miners "sweat" the machines they already own.

The lesson, De Calophyllum longifolium says, is that farm machinery gross sales could lose for long time - level if granulate prices reverberate because of forged brave out or other changes in furnish.

Some argue, however, the pessimists are incorrect.

"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities analyst at the Golub Group, a California investiture established that newly took a bet on 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 on to batch to showrooms lured by what Denounce Nelson, World Health Organization grows corn, soybeans and wheat berry on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on ill-used equipment.

Earlier this month, Horatio Nelson traded in his Deere meld with 1,000 hours on it for one and only with hardly 400 hours on it. The deviation in cost betwixt the deuce machines was merely all over $100,000 - and the principal offered to add Lord Nelson that sum of money interest-unloosen 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 Jacques Louis David Greising and Tomasz Janowski)