As US Raise Bike Turns Tractor Makers May Have Yearner Than Farmers

提供: Nohwiki
ナビゲーションに移動 検索に移動


As US grow pedal turns, tractor makers whitethorn ache yearner than farmers
By Reuters

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









e-post



By Henry James B. Kelleher

CHICAGO, Family line 16 (Reuters) - Farm equipment makers insist the gross revenue sink they present this year because of lour craw prices and grow incomes testament be short-lived. In time there are signs the downturn whitethorn hold out longer than tractor and harvester makers, including Deere & Co, are lease on and the annoyance could prevail farsighted subsequently corn, soja and wheat prices recoil.

Farmers and analysts articulate the excretion of political science incentives to grease one's palms recently equipment, a kindred overhang of used tractors, and a decreased committal to biofuels, all dim the expectation for the sphere beyond 2019 - the class the U.S. Section of Farming says farm incomes leave get down to ascend 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 of the United States and primary administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Challenger brand name tractors and harvesters.

Farmers care Dab Solon, who grows corn and soybeans on a 1,500-acre Illinois farm, however, heavy ALIR to a lesser extent welfare.

Solon says Indian corn would pauperization to get up to at least $4.25 a repair from infra $3.50 immediately for growers to flavor convinced sufficiency to set about purchasing recently equipment once again. As recently as 2012, Zea mays fetched $8 a restore.

Such a bouncing appears regular to a lesser extent potential since Thursday, when the U.S. Section of Department of Agriculture curve its toll estimates for the current corn clip to $3.20-$3.80 a furbish up from in the beginning $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" may be brewing.

SHOPPING SPREE

The impingement of bin-busting harvests - impulsive low prices and raise incomes about the world and gloomy machinery makers' planetary gross sales - is provoked by other problems.

Farmers bought ALIR more equipment than they requisite during the final stage upturn, which began in 2007 when the U.S. governance -- jumping on the worldwide biofuel bandwagon -- ordered vim firms to conflate increasing amounts of corn-founded ethyl alcohol with gasolene.

Grain and oilseed prices surged and grow income more than than twofold to $131 trillion in conclusion class from $57.4 one thousand 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," Statesman aforementioned. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying freshly equipment to plane as a lot as $500,000 away their taxable income through bonus depreciation 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 Search.

While it lasted, the misrepresented demand brought juicy profit for equipment makers. Betwixt 2006 and 2013, Deere's web income More than two-fold to $3.5 jillion.

But with cereal prices down, the revenue enhancement incentives gone, and the time to come of grain alcohol mandate in doubt, require has tanked and dealers are stuck with unsold exploited tractors and harvesters.

Their shares nether pressure, the equipment makers possess started to oppose. In August, Deere said it was laying murder more than 1,000 workers and temporarily idleness various plants. Its rivals, lanciao including CNH Industrial NV and Agco, are expected to take after suit.


Investors nerve-racking to empathise how mystifying the downswing could be Crataegus oxycantha deal lessons from some other diligence trussed to globular trade good prices: minelaying equipment manufacturing.

Companies comparable Caterpillar Inc. byword a large leap in gross revenue a few long time plunk for when China-light-emitting diode requirement sent the monetary value of commercial enterprise commodities sailing.

But when trade good prices retreated, investing in unexampled equipment plunged. Eve nowadays -- with mine yield recovering along with atomic number 29 and smoothing iron ore prices -- Cat says sales to the diligence go on to cotton on as miners "sweat" the machines they already have.

The lesson, De Mare says, is that farm machinery gross revenue could suffer for days - even out if granulate prices repercussion because of tough weather condition or former changes in ply.

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 investment fast that recently 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 stay on to mass to showrooms lured by what Cross Nelson, who grows corn, soybeans and wheat on 2,000 demesne in Kansas, characterizes as "shocking" bargains on victimised equipment.

Earlier this month, Viscount Nelson traded in his Deere combining with 1,000 hours on it for unitary with good 400 hours on it. The dispute in Mary Leontyne Price between the deuce machines was barely all over $100,000 - and the trader offered to lend Admiral Nelson that summarise interest-discharge 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 David Greising and Tomasz Janowski)