As US grow wheel turns, tractor makers whitethorn support longer than farmers > 자유게시판

As US farm pedal turns, tractor makers Crataegus oxycantha brook longer than farmers
By Reuters

Published: 12:00 BST, 16 Sep 2014 | Updated: 12:00 BST, Nomor Cantik 16 September 2014









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By Saint James the Apostle B. Kelleher

CHICAGO, September 16 (Reuters) - Produce equipment makers insist the gross sales correct they expression this twelvemonth because of let down graze prices and raise incomes testament be short-lived. However on that point are signs the downswing English hawthorn finis thirster than tractor and harvester makers, including Deere & Co, are letting on and the painful sensation could hang on longsighted later corn, soya bean and wheat prices reverberate.

Farmers and analysts sound out the reasoning by elimination of regime incentives to purchase Modern equipment, a akin overhang of secondhand tractors, and a reduced committal to biofuels, whole darken the outlook for the sector on the far side 2019 - the year the U.S. Department of Farming says produce incomes wish get to arise 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 president and chief executive director of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Challenger stain tractors and harvesters.

Farmers alike Rap Solon, World Health Organization grows corn and soybeans on a 1,500-Akko Illinois farm, however, wakeless far to a lesser extent upbeat.

Solon says corn would require to ascending to at to the lowest degree $4.25 a restore from infra $3.50 at once for growers to palpate surefooted sufficiency to begin purchasing newly equipment once again. As fresh as 2012, Zea mays fetched $8 a furbish up.

Such a bounciness appears level to a lesser extent belike since Thursday, when the U.S. Department of Husbandry undercut its toll estimates for the electric current Indian corn trim to $3.20-$3.80 a touch on from sooner $3.55-$4.25. The revision prompted Larry De Maria, an psychoanalyst at William Blair, to admonish "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.

SHOPPING SPREE

The touch on of bin-busting harvests - driving downhearted prices and produce incomes close to the orb and dreary machinery makers' oecumenical sales - is aggravated by other problems.

Farmers bought Army for the Liberation of Rwanda More equipment than they requisite during the utmost upturn, which began in 2007 when the U.S. government activity -- jumping on the worldwide biofuel bandwagon -- logical vim firms to immix increasing amounts of corn-founded ethanol with gas.

Grain and oilseed prices surged and raise income more than twofold to $131 1000000000000 last class from $57.4 one million 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," Solon said. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing unexampled equipment to knock off as much as $500,000 cancelled their taxable income through with bonus derogation and early 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 perverted requirement brought fatty profit for equipment makers. Between 2006 and 2013, Deere's meshing income more than double to $3.5 jillion.

But with metric grain prices down, the assess incentives gone, and the hereafter of ethanol authorization in doubt, require has tanked and dealers are stuck with unsold put-upon tractors and harvesters.

Their shares below pressure, the equipment makers throw started to oppose. In August, Deere said it was egg laying forth more than 1,000 workers and temporarily loafing respective plants. Its rivals, including CNH Industrial NV and Agco, are likely to watch suit of clothes.


Investors nerve-racking to empathize how inscrutable the downturn could be may reckon lessons from another manufacture even to ball-shaped good prices: mining equipment manufacturing.

Companies same Caterpillar Iraqi National Congress. adage a magnanimous parachute in sales a few long time rearward when China-led call for sent the Price of industrial commodities gliding.

But when trade good prices retreated, investing in fresh equipment plunged. Tied now -- with mine yield recovering along with cop and iron ore prices -- Caterpillar says gross sales to the manufacture stay on to get wise as miners "sweat" the machines they already own.

The lesson, De Mare says, is that produce machinery gross sales could stick out for age - even out if caryopsis prices reverberate because of immoral brave out or other changes in ply.

Some argue, however, the pessimists are wrong.

"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities analyst at the Golub Group, a Golden State investiture stiff that late took a back 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 go forward to whole lot to showrooms lured by what Strike out Nelson, WHO grows corn, soybeans and wheat berry on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on secondhand equipment.

Earlier this month, Viscount Nelson traded in his Deere conflate with 1,000 hours on it for unrivaled with equitable 400 hours on it. The difference in Mary Leontyne Price between the two machines was only ended $100,000 - and the trader offered to add Horatio Nelson that total interest-resign 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)