(Bloomberg) -- Deere & Co. fell the most in nearly three months after trimming its annual profit outlook as tumbling crop prices give farmers less money for equipment purchases.

The world’s biggest farm-machinery producer is seen as a bellwether for the health of the agriculture industry, with demand for its tractors rising and falling with farmers’ fortunes. Machinery makers have been hit by declining agriculture income and grain prices, even as a growing world population and an increased focus on food security helps to provide long-term demand for equipment.

Deere on Thursday said net income for the fiscal year will be between $7.5 billion and $7.75 billion. That’s down from its initial outlook in November for between $7.75 billion and $8.25 billion, and compares with estimates compiled by Bloomberg of $7.75 billion.

Deere shares fell as much as 5.5%, the most since Nov. 22, the last time it reported earnings. The stock is down more than 18% from a record closing high reached in July 2023.

The lower full-year forecast came as Deere reported first-quarter earnings that beat analyst estimates.

The company said its sales in Europe — where farmers have been protesting — are likely to drop 10% to 15% this year, slightly worse than its forecast in November. Deere’s rival CNH Industrial NV has also flagged Europe’s farmer revolt as a headwind for equipment demand.

“Weakening ag demand in Europe is the primary driver of the updated outlook,” William Blair analysts Larry De Maria and Ross Sparenblek wrote in a note.

During the company’s first quarter, Deere shipped fewer tractors globally but the reduced volume was partially offset by higher prices. Meanwhile, farm income in the US is set to drop by the most since 2006 this year. Corn, the most widely planted American crop, is trading near the lowest levels since 2020.

Deere is counting on product advancements to help draw in customers, such as crop sprayers that use artificial intelligence to identify weeds. It’s also been testing fully autonomous tractors. Deere in January announced a partnership with Elon Musk’s SpaceX to connect its farm equipment to the internet through Starlink satellites — which will help the company with its goals to generate recurring revenue through subscriptions even when equipment sales slow.

“Customers are wanting higher levels of technology, and they want us to rapidly accelerate that in markets where they don’t have the infrastructure to support it,” Deere Chief Executive Officer John May said Thursday on a call with investors.

--With assistance from Gerson Freitas Jr..

(Updates shares, adds CEO comment from investor call.)

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