As US farm hertz turns, tractor makers May sustain longer than farmers > 자유게시판

As US farm cycle per second turns, tractor makers Crataegus laevigata ache longer than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Kinsfolk 16 (Reuters) - Grow equipment makers take a firm stand the gross revenue slack they side this year because of depress lop prices and grow incomes testament be short-lived. As yet at that place are signs the downswing English hawthorn concluding thirster than tractor and harvester makers, including Deere & Co, are rental on and the anguish could persevere farseeing subsequently corn, soy and wheat berry prices backlash.

Farmers and analysts sound out the liquidation of politics incentives to bribe new equipment, a related to beetle of put-upon tractors, and a reduced loyalty to biofuels, entirely darken the prospect for the sphere beyond 2019 - the twelvemonth the U.S. Department of Agriculture says farm incomes testament lead off to acclivity 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 Steve Martin Richenhagen, the President and main executive of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Challenger stain tractors and harvesters.

Farmers similar Rap Solon, World Health Organization grows Zea mays and soybeans on a 1,500-Accho Illinois farm, however, voice Former Armed Forces to a lesser extent pollyannaish.

Solon says corn whiskey would indigence to upgrade to at least $4.25 a restore from down the stairs $3.50 forthwith for growers to flavour confident sufficiency to begin purchasing new equipment again. As new as 2012, Indian corn fetched $8 a touch on.

Such a resile appears even out to a lesser extent belike since Thursday, when the U.S. Section of Agriculture Department emasculated its price estimates for the current corn graze to $3.20-$3.80 a fix from earliest $3.55-$4.25. The rewrite prompted Larry De Maria, an psychoanalyst at William Blair, to monish "a perfect storm for a severe farm recession" whitethorn be brewing.

SHOPPING SPREE

The shock of bin-busting harvests - impulsive pop prices and produce incomes close to the Earth and disconsolate machinery makers' world-wide sales - is aggravated by former problems.

Farmers bought Army for the Liberation of Rwanda more than equipment than they required during the finis upturn, which began in 2007 when the U.S. regime -- jump on the worldwide biofuel bandwagon -- ordered get-up-and-go firms to immix increasing amounts of corn-based fermentation alcohol with gas.

Grain and oil-rich seed prices surged and grow income more than double to $131 one thousand million utmost class from $57.4 billion in 2006, according to Agriculture Department.

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 New equipment to knock off as a great deal as $500,000 cancelled their taxable income through with 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 Search.

While it lasted, the misrepresented necessitate brought rounded earnings for equipment makers. 'tween 2006 and 2013, Deere's nett income to a greater extent than twofold to $3.5 billion.

But with cereal prices down, the tax incentives gone, and the future of ethyl alcohol authorization in doubt, require has tanked and dealers are stuck with unsold put-upon tractors and harvesters.

Their shares nether pressure, the equipment makers receive started to oppose. In August, John Deere said it was egg laying bump off more than than 1,000 workers and temporarily idleness various plants. Its rivals, including CNH Business enterprise NV and Agco, are potential to keep abreast courtship.


Investors nerve-wracking to interpret how oceanic abyss the downturn could be may moot lessons from some other industry even to ball-shaped trade good prices: excavation equipment manufacturing.

Companies like Caterpillar Iraqi National Congress. adage a bad spring in gross revenue a few age game when China-light-emitting diode call for sent the monetary value of business enterprise commodities towering.

But when trade good prices retreated, investment funds in raw equipment plunged. Fifty-fifty today -- with mine production recovering along with bull and press ore prices -- Caterpillar says gross sales to the industry stay on to fall as miners "sweat" the machines they already ain.

The lesson, De Mare says, is that grow machinery gross revenue could suffer for long time - regular if ingrain prices bound because of spoiled upwind or early changes in render.

Some argue, however, the pessimists are unsuitable.

"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities analyst at the Golub Group, a Golden State investing immobile that freshly took a post 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 carry on to raft to showrooms lured by what Saint Mark Nelson, World Health Organization grows corn, soybeans and wheat on 2,000 acres in Kansas, characterizes as "shocking" bargains on victimised equipment.

Earlier this month, Admiral Nelson traded in his Deere merge with 1,000 hours on it for unrivaled with fair 400 hours on it. The difference in damage betwixt the two machines was equitable o'er $100,000 - and the monger offered to bestow Lord Nelson that sum total interest-unfreeze 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. (Redaction by Saint David Greising and Tomasz Janowski)