(AP) - The Agriculture Department on Friday reduced its forecast for this year's corn and soybean harvests due to dryer weather, potentially leading to higher commodity prices. The forecast for Minnesota's corn crop was down slightly, but the state's soybean forecast was unchanged.
U.S. corn production will be 12.1 billion bushels, down from its 12.3 billion estimate last month, the USDA said. The soybean crop is projected to be slightly lower, at 2.93 billion bushels, down from its earlier estimate of 2.97 billion.
While the predicted corn crop will be 8 percent below last year's, it would still be the second largest on record. The soybean crop would be 13 percent higher than last year's and the fourth largest ever.
That represents a major turnaround from earlier this summer, when some analysts feared the Midwestern floods in June had devastated the crops and would make already-expensive agricultural commodities even pricier.
Minnesota's corn crop is now projected at 1.18 billion bushels, compared with the August forecast of 1.20 billion bushels and a record 1.19 billion bushels harvested in 2005.
The state's soybean crop forecast remains at 278 million bushels. The state record was 319 million bushels set in 2006.
For corn, Minnesota's average yield forecast is now 163 bushels per acre, down two bushels from last month but up 17 bushels from last year. The average soybean yield forecast remains unchanged at 40 bushels per acre, one bushel below last year's yields.
This month's report is only the second of the USDA's reports this year to include actual field visits and farmer surveys, which analysts consider more reliable.
The reports are closely watched by companies that use corn and soybeans for livestock feed, such as Tyson Foods Inc., Pilgrims Pride Corp. and Smithfield Foods Inc.
Higher commodity prices this year have cut the profits of chicken, beef and pork producers. The higher prices have also hurt corn-based ethanol manufacturers, such as Archer Daniels Midland Co.
The Midwest floods sent corn prices to record highs of almost $8 a bushel this summer, up from just over $3 in early 2007 and $2 in 2006.
But the USDA said last month that "nearly ideal" growing weather has helped Midwestern farmers recover.
That has helped corn prices fall about 35 percent from their highs. Corn declined almost 8 cents a bushel to $5.37 Thursday on the Chicago Board of Trade.
Soybeans, meanwhile, jumped to more than $12 a bushel this summer, up from $6.30 in early 2007. Soybean prices fell to $11.78 Thursday.
The USDA increased its price estimates for corn and soybeans. It projected the season-average price for corn will be between $5.00 and $6.00 per bushel, up 10 cents from last month, while soybeans will be between $11.60 and $13.10 per bushel, also 10 cents higher.
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