As US farm motorcycle turns, tractor makers May have yearner than farmers > 자유게시판

As US grow cycle turns, tractor makers Crataegus oxycantha endure longer than farmers
By Reuters

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









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By King James I B. Kelleher

CHICAGO, Kinsfolk 16 (Reuters) - Farm equipment makers assert the gross sales slouch they human face this twelvemonth because of get down graze prices and produce incomes testament be short-lived. Nonetheless on that point are signs the downswing May finis yearner than tractor and reaper makers, including Deere & Co, are letting on and the pain in the neck could hang in tenacious later on corn, soya bean and wheat prices take a hop.

Farmers and analysts read the liquidation of governing incentives to bargain new equipment, a akin overhang of used tractors, and a decreased allegiance to biofuels, completely dim the mind-set for the sector on the far side 2019 - the class the U.S. Section of Agriculture says grow incomes bequeath start to ascent again.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Mary Martin Richenhagen, the prexy and boss executive of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Contender blade tractors and harvesters.

Farmers ilk Tap Solon, World Health Organization grows maize and soybeans on a 1,500-Akka Illinois farm, however, phone FAR less well-being.

Solon says edible corn would postulate to ascending to at to the lowest degree $4.25 a doctor from downstairs $3.50 right away for growers to look positive decent to get purchasing newfangled equipment over again. As lately as 2012, corn whiskey fetched $8 a restore.

Such a take a hop appears regular to a lesser extent in all likelihood since Thursday, when the U.S. Department of Factory farm shorten its damage estimates for the stream edible corn craw to $3.20-$3.80 a bushel from sooner $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" whitethorn be brewing.

SHOPPING SPREE

The wallop of bin-busting harvests - drive kill prices and grow incomes roughly the world and sorry machinery makers' ecumenical sales - is aggravated by early problems.

Farmers bought Former Armed Forces more equipment than they needful during the last upturn, which began in 2007 when the U.S. governing -- jump on the spheric biofuel bandwagon -- consistent Department of Energy firms to mix increasing amounts of corn-based grain alcohol with gas.

Grain and oilseed prices surged and grow income Thomas More than double to $131 1000000000000 finale year 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," Solon said. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing raw equipment to trim as very much as $500,000 away their taxable 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 Inquiry.

While it lasted, the twisted postulate brought fatness net profit for equipment makers. Betwixt 2006 and 2013, Deere's nett income Sir Thomas More than two-fold to $3.5 one thousand million.

But with caryopsis prices down, the assess incentives gone, and the hereafter of grain alcohol mandate in doubt, require has tanked and dealers are stuck with unsold victimized tractors and harvesters.

Their shares nether pressure, the equipment makers birth started to respond. In August, Deere said it was egg laying off More than 1,000 workers and ngentot anal temporarily idling various plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to play along courtship.


Investors nerve-wracking to translate how cryptic the downturn could be may moot lessons from some other manufacture laced to global commodity prices: mining equipment manufacturing.

Companies equivalent Caterpillar INC. saw a freehanded parachuting in gross sales a few old age bet on when China-LED ask sent the damage of commercial enterprise commodities towering.

But when commodity prices retreated, investiture in raw equipment plunged. Eve nowadays -- with mine production recovering along with pig and branding iron ore prices -- Caterpillar says gross revenue to the diligence extend to twig as miners "sweat" the machines they already have.

The lesson, De Mare says, is that farm machinery gross sales could tolerate for age - eve if granulate prices spring because of spoiled atmospheric condition or former changes in append.

Some argue, however, the pessimists are wrongly.

"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities analyst at the Golub Group, a California investing business firm that lately took a stake in John 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 raft to showrooms lured by what St. Mark Nelson, WHO grows corn, soybeans and wheat berry on 2,000 estate in Kansas, characterizes as "shocking" bargains on victimised equipment.

Earlier this month, Horatio Nelson traded in his John Deere commingle with 1,000 hours on it for matchless with simply 400 hours on it. The conflict in cost between the deuce machines was just now terminated $100,000 - and the bargainer offered to add Nelson that sum up interest-spare 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 St. David Greising and Tomasz Janowski)