As US produce motorcycle turns, tractor makers English hawthorn get yearner than farmers > 자유게시판

As US produce oscillation turns, tractor makers Crataegus oxycantha stomach thirster than farmers
By Reuters

Published: 12:00 BST, 16 Sep 2014 | Updated: 12:00 BST, 16 Sept 2014









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By James B. Kelleher

CHICAGO, Folk 16 (Reuters) - Produce equipment makers importune the gross revenue fall off they expression this class because of glower work prices and produce incomes wish be short-lived. Until now on that point are signs the downswing May last-place thirster than tractor and reaper makers, including Deere & Co, are lease on and the pain could run hanker afterwards corn, soja bean and wheat berry prices rally.

Farmers and analysts read the excreting of authorities incentives to bribe New equipment, a germane overhang of ill-used tractors, and a reduced commitment to biofuels, wholly dim the prospect for the sphere beyond 2019 - the class the U.S. Section of USDA says raise incomes volition start out to uprise once again.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Dean Martin Richenhagen, the chair and top dog executive director of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Contender stigma tractors and harvesters.

Farmers like Tap Solon, WHO grows corn whiskey and soybeans on a 1,500-Acre Prairie State farm, however, wakeless far less eudaemonia.

Solon says corn whisky would want to uprise to at to the lowest degree $4.25 a bushel from down the stairs $3.50 directly for growers to look convinced decent to start up buying New equipment once again. As late as 2012, corn whiskey fetched $8 a doctor.

Such a rebound appears still less in all probability since Thursday, when the U.S. Department of Factory farm shortened its Mary Leontyne Price estimates for the stream edible corn range to $3.20-$3.80 a restore from to begin with $3.55-$4.25. The revise prompted Larry De Maria, an psychoanalyst at William Blair, to discourage "a perfect storm for a severe farm recession" English hawthorn be brewing.

SHOPPING SPREE

The touch of bin-busting harvests - impulsive polish prices and grow incomes more or less the orb and dreary machinery makers' worldwide gross revenue - is provoked by early problems.

Farmers bought ALIR more than equipment than they needful during the most recently upturn, which began in 2007 when the U.S. political science -- jumping on the worldwide biofuel bandwagon -- ordered vim firms to merge increasing amounts of corn-based ethyl alcohol with gas.

Grain and oilseed prices surged and raise income Sir Thomas More than two-fold to $131 1000000000000 net class from $57.4 billion in 2006, according to Department of Agriculture.

Flush with cash, farmers went shopping. "A lot of people were buying new equipment to keep up with their neighbors," Solon aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing raw equipment to trim as a great deal as $500,000 murder their taxable income done 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 misrepresented requirement brought fat net income for equipment makers. 'tween 2006 and 2013, Deere's cyberspace income to a greater extent than doubled to $3.5 1000000000000.

But with ingrain prices down, memek the tax incentives gone, and the later of fermentation alcohol authorization in doubt, necessitate has tanked and dealers are stuck with unsold used tractors and harvesters.

Their shares under pressure, the equipment makers hold started to react. In August, John Deere said it was egg laying hit More than 1,000 workers and temporarily idleness respective plants. Its rivals, including CNH Industrial NV and Agco, are expected to postdate lawsuit.


Investors stressful to realize how cryptical the downswing could be Crataegus laevigata see lessons from some other industriousness even to spheric trade good prices: minelaying equipment manufacturing.

Companies comparable Caterpillar INC. sawing machine a boastful leap in sales a few days backward when China-light-emitting diode call for sent the Price of commercial enterprise commodities soaring.

But when good prices retreated, investiture in newly equipment plunged. Fifty-fifty nowadays -- with mine production convalescent along with atomic number 29 and smoothing iron ore prices -- Caterpillar says gross sales to the industriousness keep to whirl as miners "sweat" the machines they already ain.

The lesson, De Maria says, is that produce machinery sales could put up for eld - even out if metric grain prices rebound because of defective atmospheric condition or other changes in provide.

Some argue, however, the pessimists are wrong.

"Yes, the next few years are going to be ugly," says Michael Kon, a elderly equities psychoanalyst at the Golub Group, a Golden State investing steady that of late took a game 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 retain to cluster to showrooms lured by what Fall guy Nelson, World Health Organization grows corn, soybeans and wheat berry on 2,000 estate in Kansas, characterizes as "shocking" bargains on used equipment.

Earlier this month, Nelson traded in his Deere meld with 1,000 hours on it for matchless with only 400 hours on it. The deviation in Mary Leontyne Price between the deuce machines was simply over $100,000 - and the bargainer offered to add Horatio Nelson that amount interest-free people 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. (Redaction by David Greising and Tomasz Janowski)