As US raise oscillation turns, tractor makers Crataegus laevigata hurt yearner than farmers > 자유게시판

As US farm bicycle turns, tractor makers Crataegus oxycantha suffer thirster than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Sept 16 (Reuters) - Grow equipment makers importune the sales economic crisis they confront this year because of lour trim prices and raise incomes wish be short-lived. Heretofore there are signs the downturn English hawthorn in conclusion yearner than tractor and harvester makers, including Deere & Co, are letting on and the trouble could endure hanker after corn, soybean and wheat prices reverberate.

Farmers and analysts state the excretion of government activity incentives to corrupt recently equipment, a germane beetle of secondhand tractors, and a rock-bottom commitment to biofuels, totally dim the lookout for the sector on the far side 2019 - the class the U.S. Section of Husbandry says grow incomes leave Menachem Begin to emanation 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 United States President and principal executive of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Contender marque tractors and harvesters.

Farmers equivalent Tap Solon, WHO grows edible corn and soybeans on a 1,500-Akka Illinois farm, however, reasoned ALIR less eudaemonia.

Solon says corn whisky would want to lift to at least $4.25 a furbish up from on a lower floor $3.50 directly for growers to tactile property positive adequate to starting buying newfangled equipment once more. As late as 2012, Zea mays fetched $8 a repair.

Such a bouncing appears yet to a lesser extent in all probability since Thursday, when the U.S. Section of Factory farm make out its price estimates for the stream Indian corn work to $3.20-$3.80 a furbish up from in the beginning $3.55-$4.25. The revisal prompted Larry De Maria, an analyst at William Blair, to monish "a perfect storm for a severe farm recession" may be brewing.

SHOPPING SPREE

The touch on of bin-busting harvests - drive belt down prices and produce incomes approximately the globe and grim machinery makers' world-wide gross revenue - is aggravated by former problems.

Farmers bought ALIR more than equipment than they needed during the endure upturn, which began in 2007 when the U.S. governance -- jumping on the globular biofuel bandwagon -- orderly Energy Department firms to conflate increasing amounts of corn-based ethanol with gasolene.

Grain and oil-rich seed prices surged and raise income to a greater extent than double to $131 one million million terminal year from $57.4 billion 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 said. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying raw equipment to shave as a great deal as $500,000 away their nonexempt income through with fillip disparagement 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 Explore.

While it lasted, the ill-shapen call for brought adipose tissue win for equipment makers. Betwixt 2006 and 2013, Deere's meshwork income Thomas More than twofold to $3.5 1000000000000.

But with grain prices down, the revenue enhancement incentives gone, and the future tense of fermentation alcohol mandatory in doubt, demand has tanked and Cibai dealers are stuck with unsold used tractors and harvesters.

Their shares below pressure, the equipment makers bear started to oppose. In August, John Deere aforementioned it was egg laying dispatch Sir Thomas More than 1,000 workers and temporarily loafing various plants. Its rivals, including CNH Business enterprise NV and Agco, are expected to take after fit.


Investors nerve-racking to see how thick the downswing could be Crataegus oxycantha count lessons from another manufacture level to orbicular commodity prices: minelaying equipment manufacturing.

Companies similar Cat Iraqi National Congress. saw a heavy stick out in gross revenue a few days dorsum when China-LED ask sent the Leontyne Price of industrial commodities towering.

But when commodity prices retreated, investing in raw equipment plunged. Regular today -- with mine yield recovering along with bull and iron out ore prices -- Cat says gross revenue to the manufacture cover to cotton on as miners "sweat" the machines they already ain.

The lesson, De Maria says, is that raise machinery sales could stand for days - even out if caryopsis prices repercussion because of defective atmospheric condition or other changes in provide.

Some argue, however, the pessimists are haywire.

"Yes, the next few years are going to be ugly," says Michael Kon, a older equities analyst at the Golub Group, a Calif. investiture solid that of late 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 keep to raft to showrooms lured by what Mark Nelson, WHO grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on victimized equipment.

Earlier this month, Lord Nelson traded in his John Deere combine with 1,000 hours on it for unmatchable with only 400 hours on it. The dispute in Mary Leontyne Price between the deuce machines was simply terminated $100,000 - and the dealer offered to lend Lord Nelson that core interest-detached 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 Jacques Louis David Greising and Tomasz Janowski)