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John Deere tractors at a dealer in Longmont, Colo., on Feb. 21, 2017.Rick Wilking/Reuters

Deere & Co. DE-N raised its annual profit forecast on Friday, as the world’s largest farm-equipment maker expects a boost to margins from price hikes and solid demand for its tractors and combines.

Shares in the Moline, Ill.-based company closed down 3 per cent at US$369.10 at the end of trading Friday in New York.

Record grain prices have put more cash in farmers’ pockets and spurred them to increase investments in agricultural machinery amid a tight labour market. The U.S. Department of Agriculture estimated net farm income to have risen 25 per cent to US$23.9-billion in 2021.

Deere raised prices to combat rising shipping and supply chain costs, but that has not deterred demand, with the company’s North American order books full for most of its large farm equipment in 2022.

“Looking ahead, we expect demand for farm and construction equipment to continue benefiting from strong fundamentals,” chief executive John May said in a statement.

Deere forecast fiscal 2022 net income between US$6.7-billion and US$7.1-billion, up from its prior expectation of US$6.5-billion to US$7.0-billion.

Net sales from equipment operations rose about 6 per cent to US$8.53-billion for the first quarter ended Jan. 30.

Net income fell to US$903-million or US$2.92 a share from US$1.22-billion or US$3.87 a share a year earlier, as costs weighed.

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