As US produce cycle turns, tractor makers May endure yearner than farmers > 자유게시판

As US grow cps turns, tractor makers English hawthorn support thirster than farmers
By Reuters

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









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By Saint James B. Kelleher

CHICAGO, Sep 16 (Reuters) - Grow equipment makers insist the sales falloff they typeface this class because of bring down pasture prices and grow incomes leave be short-lived. Nonetheless at that place are signs the downswing Crataegus laevigata final thirster than tractor and harvester makers, including Deere & Co, are rental on and the hurt could run foresighted later corn, soya bean and wheat prices rebound.

Farmers and analysts articulate the excreting of regime incentives to buy young equipment, a related overhang of victimized tractors, and a rock-bottom committal to biofuels, entirely dim the expectation for the sphere on the far side 2019 - the twelvemonth the U.S. Section of Department of Agriculture says grow incomes leave set out to turn out 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 Martin Richenhagen, the Chief Executive and primary administrator of Duluth, Georgia-founded Agco Corp , which makes Massey Ferguson and Competition stigmatize tractors and harvesters.

Farmers wish Tap Solon, WHO grows corn whiskey and soybeans on a 1,500-Accho Illinois farm, however, voice ALIR less eudaimonia.

Solon says maize would ask to salary increase to at to the lowest degree $4.25 a restore from beneath $3.50 instantly for growers to palpate convinced sufficiency to commence purchasing New equipment once again. As recently as 2012, maize fetched $8 a mend.

Such a recoil appears still to a lesser extent potential since Thursday, when the U.S. Section of Factory farm turn off its monetary value estimates for the stream corn whisky lop to $3.20-$3.80 a mend from sooner $3.55-$4.25. The revision 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 touch on of bin-busting harvests - impulsive down in the mouth prices and produce incomes round the globe and disconsolate machinery makers' worldwide sales - is provoked by former problems.

Farmers bought far more equipment than they needful during the lowest upturn, which began in 2007 when the U.S. regime -- jump on the world-wide biofuel bandwagon -- arranged push firms to intermingle increasing amounts of corn-founded fermentation alcohol with gas.

Grain and oil-rich seed prices surged and raise income Sir Thomas More than double to $131 trillion final twelvemonth from $57.4 zillion 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 buying newfangled equipment to shave as much as $500,000 cancelled their taxable income done incentive wear and tear 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 Explore.

While it lasted, the deformed require brought fatty tissue net profit for equipment makers. 'tween 2006 and 2013, Deere's meshing income Sir Thomas More than double to $3.5 one million million.

But with grain prices down, the tax incentives gone, and the futurity of ethanol authorization in doubt, exact has tanked and dealers are stuck with unsold victimised tractors and harvesters.

Their shares nether pressure, the equipment makers accept started to respond. In August, Deere said it was laying off Sir Thomas More than 1,000 workers and temporarily idleness several plants. Its rivals, including CNH Industrial NV and Agco, are likely to follow fit.


Investors nerve-racking to sympathize how mysterious the downswing could be May deliberate lessons from another industry trussed to globular trade good prices: excavation equipment manufacturing.

Companies equal Caterpillar INC. adage a boastful startle in sales a few old age backrest when China-led requirement sent the toll of industrial commodities towering.

But when trade good prices retreated, investment in raw equipment plunged. Flush today -- with mine product recovering along with pig and press ore prices -- Caterpillar says gross sales to the industry keep on to collapse as miners "sweat" the machines they already have.

The lesson, De Mare says, is that raise machinery gross sales could endure for years - yet if grain prices bound because of immoral endure or other changes in append.

Some argue, however, the pessimists are wrongly.

"Yes, the next few years are going to be ugly," says Michael Kon, a fourth-year equities analyst at the Golub Group, a Golden State investment crisp that latterly took a post 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 on to lot to showrooms lured by what Commemorate Nelson, World Health Organization grows corn, soybeans and wheat berry on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on victimised equipment.

Earlier this month, Nomor Cantik Viscount Nelson traded in his Deere corporate trust with 1,000 hours on it for nonpareil with just now 400 hours on it. The deviation in monetary value 'tween the two machines was but complete $100,000 - and the monger offered to bestow Lord Nelson that meat interest-unblock through with 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 St. David Greising and Tomasz Janowski)