CHICAGO - Deere & Co , the world's largest maker of farm equipment, reported a sharper-than-expected drop in quarterly profit on Wednesday and slashed its forecast for full-year earnings, blaming the deepening global recession and volatile foreign exchange rates.

The company said its fiscal first-quarter profit fell 45 percent to $203.9 million, or 48 cents a share, from $369.1 million, or 83 cents a share, a year earlier.

Analysts, on average, expected earnings of 62 cents a share, according to Reuters Estimates.

Sales were fell 1 percent to $5.15 billion.

The Moline, Illinois-based company, which forecast just three months ago that it would report full-year earnings of $1.9 billion, cut that outlook by more than 20 percent. It said it now expected to report full-year earnings of just $1.5 billion.

(Reporting by James Kelleher; Editing by Lisa Von Ahn)