“Folks were expecting to see a drop in average yields from last month’s report because of poor late-season weather conditions across much of the Corn Belt, but nobody was forecasting this big of a drop in the corn crop,” Dr Anderson said.

USDA forecasts corn production at 12.664 billion bushels, down 3.8 per cent from the13.16 billion production forecast last month and lower than last year’s record 13.11 billion bushel crop.

“This is a pretty sizable drop in production,” Dr Anderson said. “We saw a really big drop in USDA’s forecast average yield for corn because of adverse weather in the big corn states of Illinois, Iowa and Indiana. USDA is forecasting a national average yield of 155.8 bushels per acre, compared to 162.5 bushels per acre in September’s report. A 6.7 bushel drop in yield is pretty significant.”

The smaller-than-expected corn crop and the lowest stocks situation since 1995 prompted USDA to forecast a market year average cash price of around $5 per bushel – up 60 cents from last month’s price forecast.

“Corn producers will welcome the higher price, but livestock and dairy producers will have to pay more than they expected to for feed,” Dr Anderson said.