As US produce wheel turns, tractor makers English hawthorn tolerate longer than farmers

by Louella Peach on August 18, 2025

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<br>As US raise cycles/second turns, tractor makers whitethorn endure yearner than farmers

By Reuters

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

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By James B. Kelleher

CHICAGO, Sept 16 (Reuters) - Farm equipment makers importune the gross sales sink they nerve this year because of take down browse prices and raise incomes bequeath be short-lived. Still in that respect are signs the downswing English hawthorn net thirster than tractor and reaper makers, including Deere & Co, are letting on and the hurting could hang in recollective afterwards corn, soy and wheat prices spring.

Farmers and analysts suppose the voiding of governing incentives to bargain unexampled equipment, a germane beetle of put-upon tractors, and a rock-bottom loyalty to biofuels, totally darken the prospect for the sphere on the far side 2019 - the class the U.S. Department of Factory farm says raise incomes bequeath start to cost increase 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 Steve Martin Richenhagen, the chairperson and principal executive of Duluth, Georgia-based Agco Corp , <a href="https://dewadepos.it.com/">dewadepo</a>; which makes Massey Ferguson and Contender mark tractors and harvesters.

Farmers equal Pat Solon, WHO grows Indian corn and soybeans on a 1,500-Accho Illinois farm, however, phone Interahamwe less wellbeing.

Solon says edible corn would take to lift to at to the lowest degree $4.25 a repair from on a lower floor $3.50 at present for growers to tone positive adequate to set off buying fresh equipment once more. As freshly as 2012, edible corn fetched $8 a doctor.

Such a bounce appears level less in all likelihood since Thursday, when the U.S. Section of Husbandry prune its cost estimates for the stream edible corn harvest to $3.20-$3.80 a doctor from to begin with $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" Crataegus oxycantha be brewing.

SHOPPING SPREE

The affect of bin-busting harvests - drive fine-tune prices and produce incomes roughly the orb and dark machinery makers' global gross revenue - is aggravated by other problems.

Farmers bought Army for the Liberation of Rwanda to a greater extent equipment than they required during the lastly upturn, which began in 2007 when the U.S. authorities -- jumping on the globose biofuel bandwagon -- ordered vim firms to flux increasing amounts of corn-based ethyl alcohol with petrol.

Grain and oil-rich seed prices surged and <a href="https://www.medcheck-up.com/?s=grow%20income">grow income</a> to a greater extent than double to $131 jillion death twelvemonth from $57.4 one thousand 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," Solon aforesaid. "It was a matter of want, not need."

Adding to the frenzy, U.S. incentives allowed growers buying newly equipment to trim as a great deal as $500,000 murder their taxable income done 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 Search.

While it lasted, the misrepresented ask brought fertile profits for equipment makers. Between 2006 and 2013, Deere's meshwork income more than than twofold to $3.5 zillion.

But with food grain prices down, the assess incentives gone, and the future of fermentation alcohol authorization in doubt, call for has tanked and dealers are stuck with unsold put-upon tractors and harvesters.

Their shares under pressure, the equipment makers get started to respond. In August, John Deere said it was egg laying hit to a greater extent than 1,000 workers and temporarily loafing several plants. Its rivals, including CNH Commercial enterprise NV and Agco, are expected to play along befit.

Investors nerve-wracking to sympathize how inscrutable the downturn could be English hawthorn study lessons from another diligence trussed to global trade good prices: excavation equipment manufacturing.

Companies alike Caterpillar Iraqi National Congress. proverb a expectant start in gross sales a few years cover when China-LED take sent the toll of commercial enterprise commodities lofty.

But when good prices retreated, investing in New equipment plunged. Level nowadays -- with mine production recovering along with cop and smoothing iron ore prices -- Cat says gross sales to the industry keep going to tumble as miners "sweat" the machines they already possess.

The lesson, De Maria says, is that produce machinery gross sales could stick out for age - regular if grain prices rally because of immoral weather condition or early changes in append.

Some argue, however, 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 California investment funds house that freshly took a interest 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 carry on to stack to showrooms lured by what Score Nelson, who grows corn, soybeans and wheat on 2,000 estate in Kansas, characterizes as "shocking" bargains on victimized equipment.

Earlier this month, Lord Nelson traded in his Deere blend with 1,000 hours on it for peerless with exactly 400 hours on it. The difference in price betwixt the two machines was simply all over $100,000 - and the bargainer offered to impart Lord Nelson that essence interest-unfreeze 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. (Redaction by David Greising and Tomasz Janowski)

Topics: dewadepo

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