Deere & Co (DE.N), the world's largest farm equipment maker, forecast a modest increase in sales this year despite the prospect of the biggest corn crop in U.S. history, falling short of analysts' expectations and sending its shares down 3 percent.
Shares of the company, which also makes excavators, dump trucks and log harvesters, fell to $91.25 on the New York Stock Exchange as the lower-than-expected increase in its outlook for 2013 overshadowed strong first-quarter results.
Moline, Illinois-based Deere raised its forecast for net income in the year ending October 2013 to $3.3 billion from $3.2 billion, catching up with Wall Street's expectations.
The company's sales of agricultural equipment in the United States and Canada would grow by no more than 5 percent this year, it said in a statement.
"Deere's strong quarter and guidance raise were expected, but the focus now shifts toward yields and corn prices," William Blair & Co LLC analyst Lawrence De Maria said.
After the worst drought in the U.S. Midwest in 56 years last year, farmers in the United States are gearing up to plant the biggest corn crop in the country's history.
"Having a big crop is nice, but it means that the price will be a little lower," Jefferies & Co analyst Stephen Volkmann said.
Deere on Wednesday cut its forecast for corn prices in 2013 to $5.25 per bushel from its earlier projection of $6.00.
Lower prices would mean a drop in total farm cash receipts - a product of farm commodity prices, acreage planted, crop yields and the amount and timing of government payments. Cash receipts are the primary driver of U.S. farm equipment purchases.