Today USDA’s World Agricultural Outlook Board lowered forecasts for crop yields, taking into account the rapid decline in crop conditions since early June and the latest weather data.

The projected U.S. corn yield is lowered 20 bushels per acre to 146 bushels. “Persistent and extreme June dryness across the central and eastern Corn Belt and extreme late June and early July heat from the central plains to the Ohio River Valley have substantially lowered yield prospects across most of the major growing regions,” said the report of the World Agricultural Supply and Demand Estimates (WASDE), approved by Joseph Glauber, acting secretary of agriculture. Harvested area is also slightly reduced based on the June 29 Acreage report.

The WASDE report said, “Reduced supplies and higher prices are expected to sharply lower 2012/13 corn usage with the biggest reduction for feed and residual disappearance, projected down 650 million bushels.”

Corn exports are expected 300 million bushels lower as tight supplies, higher prices and strong competition from South America limit U.S. exports. The season’s average 2012/2013 farm price for corn is projected at $5.40 to $6.40 per bushel, up sharply from $4.20 to $5.00 per bushel projected in June.

Soybean production is projected at 3.050 billion bushels, down 155 million bushels as increased harvested acres are more than offset by reduced yields. Harvested area, estimated at 75.3 million acres in the June 29 Acreage report, is 2.3 million above the June projection.

The soybean yield is projected at 40.5 bushels per acre, down 3.4 bushels from last month. “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. Soybean supplies are 160 million bushels below last month’s forecast due to lower beginning stocks and reduced production. Soybean exports for 2012/13 are reduced 115 million bushels to 1.37 billion reflecting lower U.S. supplies.”

Prices for soybeans and soybean meal were raised for 2012/13. Average seasonal price for soybeans is projected at $13.00 to $15.00 per bushel, up $1.00 on both ends of the range. Soybean meal prices are projected at $365 to $395 per short ton, up $30 on both ends of the range.