Thanks J. B. Turning to our 2017 Ag & Turf industry outlook on slide 12, which are largely unchanged from last quarter. Industry sales in the U.S. and Canada are forecasted to be down about 5% with the effect felt in both large and small models of equipment. There has been a lot of conversations regarding the trend in the retail sales in U.S. and Canada for tractors of 100 horsepower and above. It's important to note that in the third quarter, over 80% of Deere sales in this category were below 220 horsepower. As noted previously, it does appear the large ag market is stabilizing. Signs supporting the stabilization include; a considerably lower rate of industry sales decline in 2017 versus the past two years; a used equipment environment that is supportive of sales; and, increased demand for spring seasonal products. This is particularly true for what we're seeing in planters and sprayers in the first phase of our early order program for 2018 with orders up strongly. EU28 industry outlook is flat to down 5% in 2017.
Sentiment is improving in the region due to higher dairy and solid livestock margins. Dairy and livestock make up about half of farm incomes in the EU28. However, low crop prices and edible farm incomes continue to weigh on the market. In South America, industry sales of tractors and combines are projected to be up about 20% in 2017. In Brazil, the transition to the FINAME plan for 2017-2018 has gone smoothly. The government is ongoing committed agriculture, coupled with strong margins are continuing to improve farmer confidence. Sentiment and demand Argentina remains strong as well. Shifting to Asia, sales are expected to be flat to down slightly.
Turning to another product category. Industry retail sales of turf and utility equipment in the U.S. and Canada are projected to be about flat in 2017. Putting this all together, on slide 13, fiscal year 2017 Deere sales of worldwide Ag & Turf equipment are now forecast to be up about 9% versus 2016 with currency translation contributing about 1 point. The year-over-year increase is driven by growth in our overseas markets, and is also benefiting from lower beginning filed inventories. Our Ag & Turf division operating margin is forecast to be 11.58% in 2017. The implied incremental margin for the year is about 40%. Excluding the impact of onetime items, like SiteOne and the voluntary employee separation program, incremental margins are roughly 30%. Now, let's focus on Construction & Forestry on slide 14.
Net sales were up 29% in the quarter, mainly a result of higher shipment volumes, partially offset by higher sales incentive expenses. Operating profit was $110 million in the quarter, up from $54 million last year. The increase was driven by higher shipment volumes, partially offset by higher selling, administrative and general expenses, higher sales incentive expense and increased production costs. Operating margins were 7.4%, nearly 3 points higher than in last year's third quarter. Moving to slide 15.
The economic fundamentals affecting the construction and forestry industries in North America are cause for continued optimism; GDP growth is positive; job growth continues; construction spending is up from 2016 levels; housing starts are expected to exceed 1.25 million units this year; and home inventories are near 35 year lows; construction investment is forecast to grow in 2017 by about 3%, led by rebounding oil and gas and residential activities; commercial and institutional construction continued to increase moderately; machinery rental utilization rates have improved in each of the last six months, and rental rates are beginning to gain positive traction; and, used inventories has continued to come down in the past quarter. All in all, our outlook reflect the strong order book, as well as what we've seen in the way of retail sales growth over the last six months.
Moving to our C&F outlook on slide 16. Deere's Construction & Forestry sales are now forecast to be up about 15% in 2017, largely driven by demand in the U.S. and Canada. The forecast for global forestry markets is down about 5% to 10%, a result of lower sales in U.S. and Canada.
C&F's full year operating margin is now projected to be about 6.6% with an implied incremental margin of about 27%. Let's move now to our Financial Services operations. Slide 17 shows the provision for credit losses as a percent of the average owned portfolio. The financial forecast for 2017, shown on the slide, contemplates a loss provision of about 27 basis points, slightly lower than the previous forecast. This will put the losses just above the 10-year average of 26 basis points but below the 15-year average of 34 points.
Moving to slide 18, worldwide Financial Services' net income attributable to Deere & Company was $131 million in the third quarter versus $126 million last year. The improvement was primarily due to lower operating lease losses, partially offset by a higher provision for credit losses and higher selling, administrative and general expense. Financial Services' 2017 net income attributable to Deere & Company is forecast to be about $475 million, unchanged from the previous forecast.
Slide 19 outlines receivables and inventories. For the Company, as a whole, receivables and inventories ended the quarter, up $867 million due to increases in both the Ag & Turf and C&F division. We expect to end 2017 with total receivables and inventories up about $950 million with increases in both of our equipment divisions. Regarding the increase in Ag & Turf, the majority comes from inventories. Increases related to receivables are driven by our overseas markets as North American receivables are down year-over-year.
Currency translation had a significant impact in the overall change for the quarter and in the full year forecast. Slide 20 shows cost of sales as a percent of net sales. Cost of sales for the third quarter was 77.1%. Our 2017 cost of sales guidance remains about 77% of net sales. When modeling 2017, keep in mind the unfavorable impacts of raw material prices, the emissions cost, incentive compensation, voluntary separation expenses and pension and overhead expense. On the favorable side, we expect price realization of about 1 point, but slightly favorable sales mix and savings related to the voluntary employee separation program. Now, let's look at some additional details. With respect to R&D on slide 21, R&D was down 1% in the third quarter and is forecast to be down about 1% for the full year.
Moving to slide 22, SA&G expense for the Equipment Operations was up 12% in the third quarter with the main drivers being incentive compensation, commissions paid to dealers and acquisition related activities. Our 2017 forecast calls for SA&G expense to be up about 11%. Most of the full year change is expected to come from incentive compensation, voluntary separation expenses, commissions paid to dealers, acquisition related activities and currency exchange. Acquisition related activities are in large part related to our planned acquisition of the Wirtgen Group, which was announced earlier in the quarter.
Turning to slide 23, the Equipment Operations tax rate was 27% in the quarter due mainly to discreet items. For 2017, the full year effective tax rate is now forecast in the range of 30% to 32%. Slide 22 shows our Equipment Operations history of strong cash flow. Cash flow from the Equipment Operations is forecast to be about $2.9 billion in 2017. The Company's financial outlook is on slide 25.
Net sales for the fourth quarter are forecast to be up about 24% compared with 2016. Our full year outlook now calls for net sales to be up about 10%, which includes about 1 point of price realization and currency translation impact of about 1 point. Finally, our full year 2017 net income forecast is about $2.075 billion.
In closing, we're well on our way to complete another good year. The Company's ability to deliver consistently strong financials, as we've done throughout 2017, is proof of our success building the more durable business model. In addition, we are continuing to find ways to make our operations more efficient and profitable, while providing even more value to our growing global customer base. As a result, we're confident Deere is well positioned to continue its strong performance and longer term, to fully capitalize on the world's increasing need for advanced machinery and services well into the future.