Deere & Co has slashed $15bn from its forecast for total US farm operating profits in 2009 and 2010, reflecting lower corn prices, livestock revenues and government payments.

The world's biggest tractor cut its estimate of this year's profits, as defined by cash receipts minus cash expenses, by $5.4bn to $69.2bn, leaving earnings on course for a 29% slump year on year, faster than the 17% previously expected.

And it warned that a revival in 2010 would be slower than previously expected, with profits set to come in at $76.1bn compared with a previous estimate of $85.7bn.

However, it forecast better prospects for South America next year, adding $200m to forecasts for Argentine farm profits and raising its forecast for Brazilian farm earnings by 35% to $5.4bn.

"An El Nino weather pattern already in place should bring better weather conditions for summer crops [in Argentina]," Susan Karlix, Deere's investor relations manager said.

Subsidy gap

The decline in US hopes reflected in the main lower forecasts for livestock farmers' receipts, in the face of sagging dairy and hog markets. Hog prices fell to a near-seven-year low in Chicago earlier this month.

Deere made a smaller cut to its estimate for arable farmers' revenues, reducing estimates for corn prices achieved in 2009-10 by 10% to $3.40  a bushel but edging hopes for the soybean market higher.

The data, released in a report alongside Deere's third-quarter results, also highlighted a fall in government payments to farmers, in particular next year, when Deere believes they will tumble from $11.8bn to $10.0bn.

The note noted a 42% rise to R$92.5bn in a Brazilian programme aimed at helping farmers finance purchases and investments, with the government also backing interest-free loans for some tractor purchases.

In China, government support for agriculture will nearly double for a second successive year, hitting RMB204bn.