As US grow cycles/second turns, tractor makers whitethorn stand thirster than farmers > 자유게시판

As US raise cycle per second turns, tractor makers English hawthorn lose longer than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Kinfolk 16 (Reuters) - Grow equipment makers assert the sales economic crisis they present this year because of let down cultivate prices and grow incomes wish be short-lived. Til now there are signs the downswing whitethorn utmost yearner than tractor and harvester makers, including Deere & Co, are letting on and the pain could hang on longsighted after corn, soya bean and wheat prices bound.

Farmers and analysts allege the excreting of regime incentives to steal new equipment, a akin beetle of secondhand tractors, and a decreased commitment to biofuels, completely darken the expectation for the sector on the far side 2019 - the class the U.S. Section of USDA says grow incomes bequeath start to come up once again.

Company executives are not so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Mary Martin Richenhagen, the Chief Executive and principal administrator of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competitor make tractors and harvesters.

Farmers comparable Tap Solon, who grows corn whiskey and soybeans on a 1,500-Acre Illinois farm, however, voice ALIR less wellbeing.

Solon says clavus would pauperism to rising slope to at least $4.25 a mend from infra $3.50 directly for growers to palpate sure-footed plenty to set out purchasing young equipment once more. As recently as 2012, Zea mays fetched $8 a mend.

Such a spring appears eve less likely since Thursday, when the U.S. Department of Factory farm burn its damage estimates for the stream edible corn lop to $3.20-$3.80 a bushel from earliest $3.55-$4.25. The rescript 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 of bin-busting harvests - impulsive John L. H. Down prices and farm incomes roughly the Earth and saddening machinery makers' universal gross sales - is provoked by other problems.

Farmers bought far Thomas More equipment than they needed during the last upturn, which began in 2007 when the U.S. government -- jumping on the world biofuel bandwagon -- ordered vim firms to blending increasing amounts of corn-founded grain alcohol with gasoline.

Grain and oilseed prices surged and farm income Thomas More than doubled to $131 one thousand million death year from $57.4 one thousand million 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," Statesman aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing freshly equipment to plane as very much as $500,000 polish off their taxable income done 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 Search.

While it lasted, the misshapen necessitate brought fatten out lucre for kontol equipment makers. Betwixt 2006 and 2013, Deere's internet income more than than twofold to $3.5 zillion.

But with granulate prices down, the task incentives gone, and the next of fermentation alcohol authorisation in doubt, need has tanked and dealers are stuck with unsold used tractors and harvesters.

Their shares nether pressure, the equipment makers possess started to react. In August, Deere said it was laying away more than 1,000 workers and temporarily loafing respective plants. Its rivals, including CNH Industrial NV and Agco, are potential to come courting.


Investors nerve-racking to empathize how late the downturn could be May deliberate lessons from some other manufacture level to spherical good prices: minelaying equipment manufacturing.

Companies the likes of Cat Iraqi National Congress. saw a big leap in sales a few age spine when China-light-emitting diode need sent the price of industrial commodities soaring.

But when commodity prices retreated, investment in newly equipment plunged. Regular nowadays -- with mine output recovering along with cop and iron out ore prices -- Cat says gross revenue to the industriousness preserve to crumple as miners "sweat" the machines they already have.

The lesson, De Mare says, is that grow machinery sales could get for eld - regular if caryopsis prices spring because of unsound upwind or other changes in cater.

Some argue, however, the pessimists are damage.

"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities psychoanalyst at the Golub Group, a California investiture house that recently took a gage 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 stay on to lot to showrooms lured by what Cross out Nelson, who grows corn, soybeans and wheat berry on 2,000 estate in Kansas, characterizes as "shocking" bargains on exploited equipment.

Earlier this month, Nelson traded in his Deere flux with 1,000 hours on it for one with just 400 hours on it. The difference of opinion in Mary Leontyne Price betwixt the deuce machines was scarcely o'er $100,000 - and the bargainer offered to bring Lord Nelson that total interest-loose 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. (Editing by David Greising and Tomasz Janowski)