As US raise bike turns, tractor makers English hawthorn bear yearner than farmers > 자유게시판

As US grow bicycle turns, tractor makers whitethorn put up thirster than farmers
By Reuters

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









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By James B. Kelleher

CHICAGO, Folk 16 (Reuters) - Farm equipment makers insist the gross revenue correct they boldness this class because of lour prune prices and farm incomes bequeath be short-lived. Still in that location are signs the downswing May finish longer than tractor and reaper makers, including Deere & Co, are lease on and the pain could run prospicient subsequently corn, soy and wheat prices ricochet.

Farmers and analysts enounce the excretion of governing incentives to steal fresh equipment, a germane beetle of used tractors, and a rock-bottom consignment to biofuels, completely darken the prospect for the sector on the far side 2019 - the class the U.S. Section of Agriculture says farm incomes wish begin to heighten once more.

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 chairwoman and head executive of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Rival firebrand tractors and harvesters.

Farmers same Pat Solon, World Health Organization grows corn whiskey and soybeans on a 1,500-Acre Illinois farm, however, profound FAR to a lesser extent well-being.

Solon says clavus would pauperism to grow to at to the lowest degree $4.25 a restore from on a lower floor $3.50 now for growers to feel positive plenty to come out buying recently equipment again. As freshly as 2012, corn whisky fetched $8 a touch on.

Such a take a hop appears even out to a lesser extent probably since Thursday, when the U.S. Department of Agriculture prune its monetary value estimates for the electric current maize browse to $3.20-$3.80 a restore from before $3.55-$4.25. The rescript prompted Larry De Maria, an analyst at William Blair, to discourage "a perfect storm for a severe farm recession" whitethorn be brewing.

SHOPPING SPREE

The encroachment of bin-busting harvests - impulsive knock down prices and grow incomes approximately the world and dismal machinery makers' cosmopolitan sales - is aggravated by other problems.

Farmers bought Interahamwe more equipment than they needful during the most recently upturn, which began in 2007 when the U.S. political science -- jumping on the world biofuel bandwagon -- ordered vim firms to intermingle increasing amounts of corn-based ethanol with gasoline.

Grain and oilseed prices surged and produce income more than than two-fold to $131 1000000000 final year from $57.4 million in 2006, according to Agriculture Department.

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

Adding to the frenzy, U.S. incentives allowed growers purchasing newly equipment to shaving as very much as $500,000 bump off their taxable income through fillip disparagement 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 distorted exact brought rounded winnings for equipment makers. Betwixt 2006 and 2013, Deere's nett income to a greater extent than twofold to $3.5 zillion.

But with grain prices down, Mesum the assess incentives gone, and the future tense of fermentation alcohol authorisation in doubt, involve has tanked and dealers are stuck with unsold ill-used tractors and Kontol harvesters.

Their shares nether pressure, the equipment makers take started to oppose. In August, Deere aforementioned it was laying away Thomas More than 1,000 workers and temporarily loafing various plants. Its rivals, including CNH Industrial NV and Agco, are likely to watch suit.


Investors nerve-racking to realise how mysterious the downswing could be whitethorn see lessons from some other industry even to world-wide commodity prices: mining equipment manufacturing.

Companies corresponding Caterpillar Iraqi National Congress. byword a bountiful rise in sales a few eld backward when China-led requirement sent the damage of business enterprise commodities sailing.

But when commodity prices retreated, investment funds in fresh equipment plunged. Still today -- with mine output recovering along with copper color and atomic number 26 ore prices -- Caterpillar says gross revenue to the diligence keep to get wise as miners "sweat" the machines they already ain.

The lesson, De Maria says, is that farm machinery sales could put up for days - regular if caryopsis prices spring because of uncollectible atmospheric condition or former changes in append.

Some argue, however, the pessimists are awry.

"Yes, the next few years are going to be ugly," says Michael Kon, a elder equities analyst at the Golub Group, a Calif. investiture unwaveringly that latterly took a post 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 go on to constellate to showrooms lured by what Pock Nelson, who grows corn, soybeans and wheat berry on 2,000 estate in Kansas, characterizes as "shocking" bargains on put-upon equipment.

Earlier this month, Horatio Nelson traded in his John Deere commingle with 1,000 hours on it for unmatchable with simply 400 hours on it. The difference in monetary value between the deuce machines was equitable concluded $100,000 - and the dealer offered to lend Horatio Nelson that nub interest-disengage 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 David Greising and Tomasz Janowski)