John Deere commercial vehicles are seen at a dealer in Longmont, Colorado August 18, 2010. REUTERS/Rick Wilking

By Tom Polansek

CHICAGO (Reuters) - Deere & Co <DE.N>, the world's largest maker of farm equipment, will lay off more than 900 employees at plants in Iowa and Illinois in the latest round of job cuts spurred by a decline in grain prices that is hurting demand for agricultural machinery.

The layoffs, which represent about 3 percent of Deere's workforce in the United States and Canada, are set to begin early next month, the company said in a statement.

The cuts at facilities that build agricultural equipment reflect Deere's attempt "to align the size of its manufacturing workforce to market demand for products," according to the statement.

Iowa will be hit hardest by the reductions, with about 565 workers in Waterloo and 300 others in Ankeny slated to lose their jobs. In East Moline, Ill., about 45 employees will be laid off, the company said.

Also, Deere will furlough about 500 employees at a Moline, Ill., facility as part of an "extended inventory adjustment shutdown" expected to end in late summer, according to the statement.

Deere had about 59,600 full-time employees as of Oct. 31, including approximately 29,000 employees in the United States and Canada.

The cutbacks come after Deere in August said it would indefinitely lay off more than 600 employees at plants in Illinois, Iowa and Kansas.

In November, the company said it expected equipment sales to fall further as lower grain prices discourage farmers from buying tractors, harvesters and other machinery.

Sales have suffered as bumper corn and soy harvests have driven down crop prices, leaving farmers with less cash to spend on equipment. Corn prices fell about 6 percent last year, on top of a decline of nearly 40 percent in 2013.

"Basically anyone who's grown accustomed to having their business heavily supported by the farmer, there is going to be a slowdown," said Angie Maguire, vice president of grain for Citizens Elevator in Michigan.

Deere is especially vulnerable because its products are generally expensive, she added.

The company said it had added 220 new jobs at construction and forestry factories in Iowa. Nearly all of those jobs were filled by former Deere employees who were laid off last year.

Deere shares fell about 1 percent to $88.47 in early afternoon trading.





(Reporting by Tom Polansek; Editing by Paul Simao)