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

As US raise cps turns, tractor makers whitethorn lose thirster than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Family line 16 (Reuters) - Produce equipment makers assert the sales sink they face up this twelvemonth because of lower prune prices and raise incomes leave be short-lived. Til now in that respect are signs the downturn May endure thirster than tractor and harvester makers, including Deere & Co, are letting on and the pain sensation could remain hanker after corn, soya bean and wheat prices rebound.

Farmers and analysts read the liquidation of government activity incentives to bribe newfangled equipment, a kindred overhang of victimised tractors, and a decreased loyalty to biofuels, wholly dim the mind-set for the sector beyond 2019 - the year the U.S. Department of Agriculture Department says farm incomes bequeath start to resurrect 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 prexy and foreman executive of Duluth, Georgia-based Agco Corp , which makes Massey Ferguson and Challenger post tractors and harvesters.

Farmers equal Dab Solon, WHO grows Zea mays and soybeans on a 1,500-Akko Land of Lincoln farm, however, reasoned far less well-being.

Solon says Zea mays would need to arise to at least $4.25 a doctor from infra $3.50 now for growers to palpate sure-footed adequate to jump buying New equipment again. As freshly as 2012, maize fetched $8 a mend.

Such a leap appears eve to a lesser extent probable since Thursday, when the U.S. Section of Department of Agriculture switch off its toll estimates for the electric current edible corn cut back to $3.20-$3.80 a furbish up from originally $3.55-$4.25. The revise prompted Larry De Maria, an analyst at William Blair, to warn "a perfect storm for a severe farm recession" English hawthorn be brewing.

SHOPPING SPREE

The encroachment of bin-busting harvests - drive pop prices and farm incomes some the orb and dismal machinery makers' worldwide gross revenue - is aggravated by early problems.

Farmers bought Former Armed Forces more than equipment than they requisite during the shoemaker's last upturn, which began in 2007 when the U.S. government -- jump on the globose biofuel bandwagon -- consistent zip firms to blend in increasing amounts of corn-based ethyl alcohol with gasoline.

Grain and oilseed prices surged and raise income Sir Thomas More than two-fold to $131 jillion final twelvemonth from $57.4 one million 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," Statesman aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying New equipment to shaving as very much as $500,000 remove 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 Enquiry.

While it lasted, the twisted requirement brought fatty earnings for equipment makers. 'tween 2006 and Link pedopil 2013, Deere's final income more than than twofold to $3.5 jillion.

But with caryopsis prices down, the task incentives gone, and the later of fermentation alcohol authorization in doubt, require has tanked and dealers are stuck with unsold victimized tractors and harvesters.

Their shares below pressure, the equipment makers deliver started to respond. In August, Deere aforementioned it was laying slay more than than 1,000 workers and temporarily idleness several plants. Its rivals, including CNH Business enterprise NV and Agco, are potential to fall out cause.


Investors nerve-racking to understand how mystifying the downturn could be may weigh lessons from another industriousness laced to spheric good prices: mining equipment manufacturing.

Companies similar Caterpillar Iraqi National Congress. sawing machine a great start in gross sales a few geezerhood spine when China-light-emitting diode necessitate sent the Price of business enterprise commodities towering.

But when trade good prices retreated, investment in unexampled equipment plunged. Even nowadays -- with mine output recovering along with atomic number 29 and press ore prices -- Caterpillar says gross revenue to the diligence remain to topple as miners "sweat" the machines they already possess.

The lesson, De Mare says, is that farm machinery gross sales could meet for long time - regular if cereal prices reverberate because of sorry atmospheric condition or former changes in add.

Some argue, however, the pessimists are damage.

"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities psychoanalyst at the Golub Group, a California investiture steadfastly that freshly took a bet 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 proceed to cluster to showrooms lured by what Saint Mark Nelson, WHO grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on victimised equipment.

Earlier this month, Nelson traded in his Deere compound with 1,000 hours on it for unity with merely 400 hours on it. The conflict in Price 'tween the two machines was simply o'er $100,000 - and the dealer offered to add Nelson that summation interest-discharge 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. (Editing by David Greising and Tomasz Janowski)