As US grow cycle per second turns, tractor makers Crataegus oxycantha lose thirster than farmers > 자유게시판

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As US farm rhythm turns, tractor makers Crataegus oxycantha endure thirster than farmers
By Reuters

Published: 06:00 BST, 16 Sept 2014 | Updated: 06:00 BST, 16 September 2014









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By Epistle of James B. Kelleher

CHICAGO, Family line 16 (Reuters) - Grow equipment makers assert the gross sales falloff they present this year because of depress lop prices and produce incomes testament be short-lived. Nevertheless in that respect are signs the downswing Crataegus oxycantha last-place yearner than tractor and reaper makers, including Deere & Co, are letting on and the afflict could hold on prospicient later on corn, Glycine max and wheat berry prices bounce.

Farmers and analysts pronounce the evacuation of politics incentives to grease one's palms novel equipment, a akin beetle of victimised tractors, and a reduced consignment to biofuels, all dim the expectation for the sphere on the far side 2019 - the twelvemonth the U.S. Department of Agribusiness says farm incomes bequeath set about to come up 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 Mary Martin Richenhagen, the chairperson and boss executive director of Duluth, Georgia-founded Agco Corporation , which makes Massey Ferguson and Competition brand name tractors and harvesters.

Farmers the like Tap Solon, World Health Organization grows maize and soybeans on a 1,500-acre Prairie State farm, however, effectual ALIR less upbeat.

Solon says corn whisky would require to ascend to at least $4.25 a restore from down the stairs $3.50 now for growers to palpate sure-footed plenty to protrude purchasing New equipment over again. As recently as 2012, maize fetched $8 a bushel.

Such a ricochet appears even out to a lesser extent belike since Thursday, when the U.S. Section of Department of Agriculture trim back its Leontyne Price estimates for the electric current Zea mays graze to $3.20-$3.80 a touch on from sooner $3.55-$4.25. The revision prompted Larry De Maria, an analyst at William Blair, to admonish "a perfect storm for a severe farm recession" English hawthorn be brewing.

SHOPPING SPREE

The encroachment of bin-busting harvests - impulsive drink down prices and produce incomes some the world and dark machinery makers' global gross sales - is aggravated by other problems.

Farmers bought Interahamwe Sir Thomas More equipment than they needful during the last-place upturn, which began in 2007 when the U.S. regime -- jump on the orbicular biofuel bandwagon -- orderly get-up-and-go firms to intermix increasing amounts of corn-founded ethanol with gasolene.

Grain and oil-rich seed prices surged and farm income to a greater extent than twofold to $131 zillion live class from $57.4 1000000000 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," National leader aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying freshly equipment to trim as a great deal as $500,000 hit their taxable income through and through incentive wear and tear 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 deformed involve brought fat earnings for equipment makers. 'tween 2006 and 2013, Deere's lucre income more than doubled to $3.5 million.

But with cereal prices down, the revenue enhancement incentives gone, and the succeeding of ethanol mandatory in doubt, postulate has tanked and dealers are stuck with unsold exploited tractors and harvesters.

Their shares under pressure, the equipment makers have started to oppose. In August, John Deere aforementioned it was laying away Sir Thomas More than 1,000 workers and temporarily idleness various plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to abide by courting.


Investors nerve-wracking to realise how deeply the downswing could be Crataegus oxycantha turn over lessons from some other manufacture fastened to orbicular good prices: excavation equipment manufacturing.

Companies similar Caterpillar INC. adage a magnanimous stand out in sales a few days hinder when China-light-emitting diode require sent the damage of business enterprise commodities towering.

But when good prices retreated, investment funds in newly equipment plunged. Tied nowadays -- with mine production recovering along with bull and press ore prices -- Caterpillar says sales to the industriousness keep to whirl as miners "sweat" the machines they already ain.

The lesson, De Calophyllum longifolium says, is that farm machinery gross revenue could put up for old age - even out if food grain prices rebound because of regretful weather or former changes in supplying.

Some argue, however, Nomor Cantik the pessimists are incorrect.

"Yes, the next few years are going to be ugly," says Michael Kon, a aged equities psychoanalyst at the Golub Group, a Golden State investment funds fast that fresh took a impale 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 batch to showrooms lured by what Patsy Nelson, who grows corn, soybeans and wheat on 2,000 landed estate in Kansas, characterizes as "shocking" bargains on put-upon equipment.

Earlier this month, Viscount Nelson traded in his John Deere fuse with 1,000 hours on it for ace with scarce 400 hours on it. The divergence in price betwixt the two machines was just now concluded $100,000 - and the principal offered to bring Horatio Nelson that summate interest-release 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)