US slashes corn production forecast Corn prices jumped to within a whisker of their all-time high on Wednesday after the US government slashed its production forecast due to "persistent and extreme" dry and hot weather in late June and early July in the country's farming belt. The US Department of Agriculture surprised investors and traders by cutting its corn yield forecast to 146 bushels an acre, down 20 bushels from its June estimate, and lowered its predicted size of the crop to 12.9bn bushels. In June the USDA forecasted 14.79bn bushels of corn crop. The magnitude of the cuts caught everyone by surprise, said analysts. "The USDA really surprised the market by setting the yield at much lower levels than the market thought they would go," said Nick Higgins, analyst at Rabobank in London. Temperatures of about 40C in top farming areas are having a devastating effect on grain and oilseeds production. The US is the world's top exporter of corn, soyabeans and wheat, and the monthly estimates are among the most closely monitored barometers of food commodities markets. The USDA said in its monthly report that "persistent and extreme" June dryness and "extreme" late June and early July heat "have substantially lowered yield prospects across most of the major growing regions." CBOT July corn, which has surged almost 40 per cent since the start of June, rose more than 3 per cent to $7.8525 a bushel, within striking distance of the all-time high set last year of $7.9975 a bushel. The December contract, which represents the new crop, rallied 3.5 per cent to $7.48 a bushel. The USDA also anticipated a much lower crop for soyabean due to the bad weather. Global soyabean stocks are already low after severe drought earlier this year curtailed output in Argentina, Brazil, Paraguay and Uruguay. The USDA said the US farmers would harvest 40.5 bushels an acre of the oilseed later this year, down from an estimate of 43.9 bushels last month. The lower yield will reduce the size of the soya crop to 3.05bn bushels, down from 3.20bn in June. "The drop reflects sharply declining crop conditions resulting from limited rainfall since early April coupled with excessive heat across much of the producing area in late June and early July," the USDA said in its report. CBOT July soyabeans, which hit a record of $16.79½ a bushel at the start of the week, were trading at $16.67¼ a bushel, up 1.1 per cent on the day. The November contract, which represents the new crop, rose to $15.65 a bushel.