Corn is transferred to a grain bin during harvesting in Kalona on Friday, Oct. 8, 2010. A new USDA crop report issued on Friday, Oct. 8, indicates this year's corn harvest will fall short of predictions and yields will be significantly lower than last year due to a combination of weather conditions. (Liz Martin/SourceMedia Group News)

Futures prices for corn and soybeans soared Friday after the U.S. Department of Agriculture said yields are expected to be lower than forecast a month ago due to wet weather in June and July and dry weather in August.

Corn futures for December delivery rose the 30-cent trading limit, or 6 percent, to $5.2825 a bushel on the Chicago Board of Trade. The price reached a two-year high of $5.2875 on Sept. 27.

Soybean futures for November delivery soared the 70-cent trading limit, or 6.6 percent, to $11.35 a bushel in Chicago.

Don Roose, U.S. Commodities

While the market reaction reflected trader shock, Don Roose of U.S. Commodities in West Des Moines says the yield drop should have been expected.

“The farmers on the ground knew that the yields weren’t there,” Roose said. “There’s no doubt that we’re at rationing levels in the United States when we’re at a stocks-to-use ratio that shows we can’t meet projected demand.

“Something has to give and who’s going to cut back on use? Is it going to be the exporters, the animal feed industry or the ethanol producers?

“The last time that we had corn prices spike over $7 a bushel it was the biofuel industry that wound up cutting back on production.”

U.S. corn yields are expected to average 155.8 bushels per acre, down 6.7 bushels from the Sept. 1 forecast and 8.9 bushels below last year’s record of 164.7 bushels per acre. Yields decreased from last month throughout much of the Corn Belt and Tennessee Valley.

Corn production is forecast at 12.7 billion bushels, down 4 percent from the September forecast and down 3 percent from last year’s record production of 13.1 billion bushels.

Soybean yields are expected to average a record 44.4 bushels per acre, down 0.3 bushels per acre from last month but up 0.4 bushels per from last year. Compared with last month, yields are forecast lower or unchanged in all major soybean-producing states except Illinois, Kentucky, Louisiana, Michigan, New York, and Wisconsin.

The nation’s soybean farmers are expected to produce a record 3.41 billion bushels, down 2 percent from September but 1 percent above last year.

The Iowa corn yield is forecast at 169 bushels per acre, down 10 bushels per acre from the Sept. 1 forecast and 13 bushels per acre below the final yield recorded in 2009. Iowa farmers are expected to produce 2.21 billion bushels of corn, down more than 9 percent from last year.

As of Oct. 3, Iowa farmers had harvested 19 percent of the corn, more than double the five-year average of 9 percent.

The Iowa soybean yield forecast of 52 bushels per acre is unchanged from the Sept. 1, forecast, but up a bushel per acre from 2009. Planted and harvested acres were lowered by 300,000 each, to 9.9 million and 9.85 million, respectively.

If realized, Iowa soybean production would be 512 million bushels, up more than 5 percent from last year, but 15.6 million bushels less than the Sept. 1 forecast.

As of Oct. 3, Iowa’s soybean harvest was 38 percent complete, 20 percent ahead of last year, but only 1 percent ahead of the five-year average.