May 2 (Reuters) - CNH Industrial ( CNHI ) cut its annual

profit forecast on Thursday, squeezed by slowing demand for its

tractors and farm equipment as choppy crop prices and higher

borrowing costs hinder farmers from making big-ticket farming

purchases.

Global crop prices have moderated while farm incomes have

dwindled, setting up for a murky demand backdrop for the

agriculture equipment sector as farmers pull back on big

purchases such as tractors and combines.

A surge in demand for agriculture equipment early last year

had also seen machinery dealers bulk up on inventories, but that

trend is now set to reverse as dealers look to tighten their

stocks, which translates to lower margins for equipment makers

like CNH.

While strong infrastructure spending in the United States

was expected to prop up construction equipment demand, softer

trends in other global markets like China have hurt machinery

makers.

CNH's larger rival Caterpillar ( CAT ) last week forecast

glum current-quarter sales, hurt by weak construction equipment

sales in all regions but North America.

At CNH, sales of agriculture equipment, which make up close

to 75% of overall revenues, fell 14% to $3.37 billion in the

first quarter ended March 31, while construction equipment,

which typically accounts for around 16% of sales, reported a

drop of 11% to $758 million.

CNH now expects full-year adjusted profit between $1.45 and

$1.55 per share, compared with the previously estimated range of

$1.50 to $1.60 per share.

It also projected an 11% to 15% drop in agriculture segment

sales for the year, steeper than the previously expected 8% to

12% drop.

Still, higher prices helped CNH top market expectations for

quarterly sales and profit, sending its shares up about 2% in

premarket trading. Its adjusted per-share profit of 33 cents

beat expectations of 26 cents, according to LSEG data.