Deere, the world's largest farm equipment maker, has revised its annual profit forecast for the second time, citing declining sales of large agriculture equipment. The company now projects steeper declines in sales amid falling crop prices and reduced farmer sentiment.

According to the U.S. Department of Agriculture, farm income is expected to slide by 25.5% to $116.1 billion this year, marking the second consecutive annual drop. Lower corn and soy prices, coupled with increasing production costs, have put pressure on farmers. Additionally, higher interest rates have added to the challenges faced by the agricultural industry.

To manage bloated inventories, some equipment dealers have resorted to offering discounts or auctioning off machines at lower prices. This situation has forced Deere and other industry players to reduce their production levels.

Deere's Director of Investor Relations, Josh Beal, acknowledged the tougher global agricultural environment and the decline in farmer sentiment. He stated, "Uncertainty has caused a decline in farmer sentiment. As a result, we're seeing a softer retail environment today than we did just 6 months ago."

Deere now expects sales of large agriculture equipment to decline by 20% to 25% this year, a larger drop compared to its previous estimate of around 20%. The company now projects a net income of approximately $7 billion for fiscal 2024, down from the prior range of $7.50 billion to $7.75 billion.

Shares of Deere dipped by 3% in mid-day trading following the announcement. Despite the revised forecast, the company still managed to surpass second-quarter estimates. Net income fell by 17% to $2.37 billion, or $8.53 per share, but exceeded the estimated $7.86 per share. Net sales also declined by 15% to $13.61 billion, but surpassed estimates of $13.28 billion.

The downward revision in Deere's forecast highlights the challenges facing the agricultural industry, including falling crop prices, increased production costs, and reduced farmer sentiment. The company's focus will be on managing inventories and adapting to the softer retail environment as it navigates these difficult market conditions.