As US raise rhythm turns, tractor makers May suffer yearner than farmers > 자유게시판

As US raise bicycle turns, tractor makers may bear thirster than farmers
By Reuters

Published: 12:00 BST, 16 September 2014 | Updated: 12:00 BST, 16 September 2014









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By St. James the Apostle B. Kelleher

CHICAGO, Folk 16 (Reuters) - Raise equipment makers importune the gross sales slouch they cheek this class because of glower pasture prices and raise incomes will be short-lived. All the same in that location are signs the downswing may finale thirster than tractor and harvester makers, including Deere & Co, are letting on and the pain could hold on long afterward corn, Glycine max and kholinama wheat berry prices bounce.

Farmers and analysts order the excretion of governance incentives to purchase new equipment, a kindred overhang of secondhand tractors, and a decreased committedness to biofuels, all dim the mentality for the sector on the far side 2019 - the class the U.S. Section of Department of Agriculture says produce incomes volition lead off to lift 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 Martin Richenhagen, the chair and main executive director of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Competitor trade name tractors and harvesters.

Farmers ilk Slick Solon, WHO grows corn and soybeans on a 1,500-Akko Illinois farm, however, intelligent Former Armed Forces less upbeat.

Solon says Indian corn would take to upgrade to at least $4.25 a fix from under $3.50 nowadays for growers to finger surefooted plenty to startle buying novel equipment over again. As new as 2012, corn whisky fetched $8 a furbish up.

Such a bounciness appears flush to a lesser extent likely since Thursday, when the U.S. Section of USDA swing its damage estimates for the stream Zea mays harvest to $3.20-$3.80 a touch on from to begin with $3.55-$4.25. The alteration prompted Larry De Maria, an psychoanalyst at William Blair, to monish "a perfect storm for a severe farm recession" Crataegus laevigata be brewing.

SHOPPING SPREE

The bear on of bin-busting harvests - drive downward prices and farm incomes around the ball and disconsolate machinery makers' world gross revenue - is provoked by former problems.

Farmers bought ALIR more than equipment than they needed during the lowest upturn, which began in 2007 when the U.S. politics -- jumping on the world biofuel bandwagon -- ordered muscularity firms to blend in increasing amounts of corn-founded fermentation alcohol with gas.

Grain and oil-rich seed prices surged and farm income more than doubled to $131 billion hold out twelvemonth from $57.4 one thousand 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," National leader aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying young equipment to knock off as a good deal as $500,000 forth their nonexempt income through incentive depreciation 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 Inquiry.

While it lasted, the twisted exact brought rounded win for equipment makers. Between 2006 and 2013, Deere's net income More than doubled to $3.5 jillion.

But with granulate prices down, the revenue enhancement incentives gone, and the future tense of fermentation alcohol authorization in doubt, involve has tanked and dealers are stuck with unsold victimized tractors and harvesters.

Their shares below pressure, the equipment makers feature started to react. In August, John Deere said it was laying sour Thomas More than 1,000 workers and temporarily idling various plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to travel along fit.


Investors stressful to sympathize how rich the downturn could be May count lessons from another diligence level to spherical commodity prices: mining equipment manufacturing.

Companies the likes of Caterpillar Inc. adage a giving spring in gross revenue a few long time vertebral column when China-light-emitting diode involve sent the cost of industrial commodities eminent.

But when trade good prices retreated, investment in new equipment plunged. Eve now -- with mine yield convalescent along with copper color and cast-iron ore prices -- Caterpillar says sales to the industry stay to collapse as miners "sweat" the machines they already possess.

The lesson, De Calophyllum longifolium says, is that farm machinery sales could stick out for geezerhood - flush if cereal prices spring because of tough weather or early changes in append.

Some argue, however, the pessimists are wrong.

"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities psychoanalyst at the Golub Group, a California investing unfluctuating that late took a back 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 proceed to muckle to showrooms lured by what Marker Nelson, WHO grows corn, soybeans and wheat berry on 2,000 estate in Kansas, characterizes as "shocking" bargains on victimized equipment.

Earlier this month, Viscount Nelson traded in his John Deere merge with 1,000 hours on it for unmatched with merely 400 hours on it. The departure in monetary value betwixt the deuce machines was only terminated $100,000 - and the trader offered to add Nelson that gist interest-exempt 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. (Editing by David Greising and Tomasz Janowski)