(Reuters) — Deere & Co. has posted a lower quarterly profit and cut its full-year outlook as declining grain prices discouraged farmers from purchasing its tractors, harvesters and other agricultural machinery.
Deere, the world’s largest maker of farm equipment, said Aug. 13 that it now expects to earn $3.1 billion US in fiscal 2014, down from its previous forecast of $3.3 billion.
It said it expects total U.S. farm cash receipts, which correlate closely with investment in new agricultural equipment, to fall to $387.1 billion in 2014, down from $407.1 billion in 2013 and below its previous forecast of $392.7 billion.
Ann Duignan, an analyst at JP Morgan, said the company’s forecast, which came just one day after the U.S. Department of Agriculture released its World Agricultural Supply and Demand Estimates, remained overly bullish.
The USDA predicted U.S. corn production will top the 14 billion bushel mark for the first time ever this year.
It also said it expects the U.S. soybean crop to come in at a record of 3.82 billion bushels, up 16 percent.
The prospect of a bumper crop has sent corn and soybean prices plummeting and soured farmers on making new capital investments.
The one bright spot in Deere’s core farm market was the U.S. livestock sector, where the company said rising meat and poultry prices were driving sales of smaller tractors and helping to moderate the weakness in the grains sector.
For the most recent quarter ended July 31, Deere reported a net profit of $850.7 million, or $2.33 a share, compared with $996.5 million, or $2.56 a share, a year earlier.
Sales fell five percent to $9.5 billion.