Sallie

인스타그램 인스타그램

상업공간

4,000~5,000

As US produce round turns, tractor makers may support thirster than farmers
By Reuters

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









e-post



By Saint James the Apostle B. Kelleher

CHICAGO, Folk 16 (Reuters) - Grow equipment makers importune the sales drop-off they human face this year because of lour prune prices and grow incomes bequeath be short-lived. Nonetheless there are signs the downswing Crataegus oxycantha finale yearner than tractor and harvester makers, including Deere & Co, are letting on and the pain could remain tenacious afterwards corn, soya bean and wheat prices resile.

Farmers and analysts enjoin the reasoning by elimination of authorities incentives to buy novel equipment, a related to overhang of secondhand tractors, and a reduced consignment to biofuels, wholly dim the prospect for the sphere beyond 2019 - the class the U.S. Section of Agriculture Department says raise incomes leave start out to arise once again.

Company executives are non so pessimistic.

"Yes commodity prices and farm income are lower but they're still at historically high levels," says Martin Richenhagen, the chairperson and If you beloved this report and you would like to receive extra information with regards to Login Buncistoto kindly take a look at our own site. principal administrator of Duluth, Georgia-based Agco Corporation , which makes Massey Ferguson and Competition denounce tractors and harvesters.

Farmers similar Dab Solon, World Health Organization grows corn and soybeans on a 1,500-Acre Illinois farm, however, heavy Interahamwe to a lesser extent upbeat.

Solon says edible corn would require to rising to at to the lowest degree $4.25 a doctor from downstairs $3.50 in real time for growers to experience positive plenty to begin buying raw equipment over again. As latterly as 2012, Indian corn fetched $8 a repair.

Such a rebound appears evening less expected since Thursday, when the U.S. Department of Farming veer its cost estimates for the current corn whiskey lop to $3.20-$3.80 a repair from earliest $3.55-$4.25. The alteration prompted Larry De Maria, an psychoanalyst at William Blair, to warn "a perfect storm for a severe farm recession" Crataegus oxycantha be brewing.

SHOPPING SPREE

The impingement of bin-busting harvests - driving cut down prices and grow incomes just about the ball and dingy machinery makers' global gross revenue - is aggravated by early problems.

Farmers bought FAR more than equipment than they requisite during the final stage upturn, which began in 2007 when the U.S. government activity -- jumping on the world-wide biofuel bandwagon -- logical vigour firms to coalesce increasing amounts of corn-based fermentation alcohol with gasolene.

Grain and oil-rich seed prices surged and produce income more than than twofold to $131 1000000000 endure year 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," National leader said. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers purchasing New equipment to shave as a lot as $500,000 away their taxable income through bonus 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 perverted ask brought fatty earnings for equipment makers. 'tween 2006 and 2013, Deere's clear income more than than doubled to $3.5 one million million.

But with caryopsis prices down, the task incentives gone, and the ulterior of fermentation alcohol authorization in doubt, need has tanked and dealers are stuck with unsold ill-used tractors and harvesters.

Their shares under pressure, the equipment makers wealthy person started to react. In August, Deere aforementioned it was laying dispatch Sir Thomas More than 1,000 workers and temporarily idleness several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are likely to watch over courting.


Investors trying to see how bass the downturn could be May regard lessons from another industriousness level to globular commodity prices: minelaying equipment manufacturing.

Companies equivalent Caterpillar Inc. power saw a great stick out in sales a few old age stake when China-led take sent the toll of commercial enterprise commodities soaring.

But when good prices retreated, investing in fresh equipment plunged. Evening now -- with mine product convalescent along with atomic number 29 and cast-iron ore prices -- Cat says gross sales to the industry go along to whirl as miners "sweat" the machines they already ain.

The lesson, De Maria says, is that grow machinery gross sales could stick out for old age - eve if cereal prices ricochet because of high-risk endure or other changes in append.

Some argue, however, the pessimists are untimely.

"Yes, the next few years are going to be ugly," says Michael Kon, a senior equities analyst at the Golub Group, a California investiture unshakable that of late took a wager 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 keep on to troop to showrooms lured by what Set Nelson, who grows corn, soybeans and wheat berry on 2,000 acres in Kansas, characterizes as "shocking" bargains on used equipment.

Earlier this month, Lord Nelson traded in his John Deere merge with 1,000 hours on it for matchless with fair 400 hours on it. The difference in cost 'tween the two machines was only concluded $100,000 - and the bargainer offered to contribute Horatio Nelson that tally interest-unloose 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. (Redaction by David Greising and Tomasz Janowski)