In a move that surprised the commodity markets, the U.S. Department of Agriculture on Friday lowered its forecast for the 2013 corn crop as yields fell.
The USDA said farmers harvested a record 13.925 billion bushels of corn this fall on yields of 158.8 bushels an acre. Thirty analysts polled by Bloomberg News had expected 14.06 billion bushels of the grain on yields of 161.1 bushels an acre.
The USDA in December had forecast 13.989 billion bushels on yields of 160.4 bushels an acre.
Corn stocks at the end of the 2013-14 marketing year on Aug. 31 are expected to total 1.631 billion bushels, the USDA said, down from a December forecast of 1.792 billion bushels.
The USDA said soybean production reached 3.289 billion bushels on yields of 43.3 bushels an acre, up from December's forecast of 3.258 billion bushels on yields of 43.0 bushels an acre. Analysts had expected the agency to forecast 3.27 billion bushels on yields of 43.19 bushels an acre.
Don Roose, president of U.S. Commodities in West Des Moines, said the USDA report went against history in that an already big crop did not get bigger.
"In fact, the big crop got smaller, the yields shrunk and therefore production shrunk from what we had thought," Roose said. "Our feed usage was higher than what we thought and our ending stocks will be just over 1.6 billion bushels, rather than the 2 billion we had expected."
Iowa corn producers harvested 2.2 billion bushels with an average yield of 165 bushels per acre, up from 1.9 billion bushels in 2012 with an average yield of 137 bushels per acre.
The state's soybean farmers harvested 411.2 million bushels with an average yield of 44.5 bushels per acre, compared with 414.3 million bushels harvested in 2012 with the same average yield per acre.
Roose said the USDA report was "positive on corn, neutral on soybeans and negative on wheat."
"The world has adequate supplies of wheat and the U.S. was on pace to shrink ending stocks," he said. "With this report, we did a 180 and increased the ending wheat stocks by 33 million bushels. That was a surprise in that our wheat acres were less than we thought, but it wasn't enough to overcome the higher ending stocks."
Roose said commodity markets will be moving "inch by inch" in trying to set corn, soybean and wheat futures prices."We were dialing in too much negative news and now we have to put a little premium back in case we don't build back supply," Roose said. "Our big cushion on corn is gone, but we could still see ending stocks at more than 2 billion bushels."