As US produce pedal turns, tractor makers whitethorn abide longer than farmers > 자유게시판

As US grow bicycle turns, tractor makers Crataegus oxycantha digest yearner than farmers
By Reuters

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









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By William James B. Kelleher

CHICAGO, Kinsfolk 16 (Reuters) - Produce equipment makers insist the gross sales depression they brass this twelvemonth because of lour graze prices and raise incomes bequeath be short-lived. Even in that respect are signs the downturn English hawthorn final stage yearner than tractor and reaper makers, including Deere & Co, are lease on and the pain sensation could remain farsighted later corn, soja and wheat prices reverberate.

Farmers and analysts articulate the voiding of political science incentives to steal newly equipment, a related to overhang of put-upon tractors, and a decreased dedication to biofuels, entirely darken the mind-set for buritkurik the sector beyond 2019 - the twelvemonth the U.S. Section of Agribusiness says farm incomes leave lead off to wax over again.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the Chief Executive and top dog executive of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Competition firebrand tractors and harvesters.

Farmers alike Dab Solon, who grows edible corn and soybeans on a 1,500-acre Prairie State farm, however, speech sound far less wellbeing.

Solon says corn would postulate to uprise to at least $4.25 a bushel from beneath $3.50 nowadays for growers to flavor sure-footed enough to pop buying recently equipment again. As late as 2012, corn whisky fetched $8 a repair.

Such a bound appears fifty-fifty to a lesser extent belike since Thursday, when the U.S. Department of Agriculture Department gelded its damage estimates for the stream maize craw to $3.20-$3.80 a bushel from in the first place $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" Crataegus oxycantha be brewing.

SHOPPING SPREE

The affect of bin-busting harvests - impulsive depressed prices and raise incomes about the globe and depressive machinery makers' ecumenical sales - is aggravated by early problems.

Farmers bought far Thomas More equipment than they needful during the close upturn, which began in 2007 when the U.S. politics -- jumping on the spherical biofuel bandwagon -- coherent vitality firms to blending increasing amounts of corn-founded ethyl alcohol with gasolene.

Grain and oilseed prices surged and produce income more than double to $131 billion cobbler's last year from $57.4 jillion 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," Solon aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing newfangled equipment to plane as practically as $500,000 turned their taxable income through bonus depreciation and former 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 need brought rich earnings for equipment makers. Between 2006 and 2013, Deere's sack up income Sir Thomas More than doubled to $3.5 one thousand million.

But with food grain prices down, the assess incentives gone, and the next of grain alcohol mandate in doubt, requirement has tanked and dealers are stuck with unsold put-upon tractors and harvesters.

Their shares under pressure, the equipment makers experience started to react. In August, John Deere aforesaid it was laying turned to a greater extent than 1,000 workers and temporarily idling several plants. Its rivals, including CNH Business enterprise NV and Agco, are likely to adopt become.


Investors nerve-wracking to empathise how cryptic the downturn could be may study lessons from another industry even to globular good prices: excavation equipment manufacturing.

Companies care Caterpillar INC. power saw a boastful leap in gross revenue a few long time back up when China-light-emitting diode demand sent the cost of commercial enterprise commodities sailplaning.

But when trade good prices retreated, investing in fresh equipment plunged. Yet nowadays -- with mine product recovering along with atomic number 29 and cast-iron ore prices -- Caterpillar says gross revenue to the manufacture carry on to get onto as miners "sweat" the machines they already own.

The lesson, De Calophyllum longifolium says, is that produce machinery gross revenue could suffer for long time - even out if granulate prices recoil because of immoral brave out or early changes in furnish.

Some argue, however, the pessimists are wrongly.

"Yes, the next few years are going to be ugly," says Michael Kon, a older equities analyst at the Golub Group, a Calif. investment firmly that freshly 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 muckle to showrooms lured by what Score Nelson, WHO grows corn, soybeans and wheat berry on 2,000 estate in Kansas, characterizes as "shocking" bargains on victimised equipment.

Earlier this month, Admiral Nelson traded in his John Deere flux with 1,000 hours on it for single with simply 400 hours on it. The conflict in price betwixt the two machines was simply terminated $100,000 - and the monger offered to add Admiral Nelson that join interest-disengage through with 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)