U.S. corn production is forecast at 12.9 billion bushels, down 1 percent from last month but 7 percent higher than 2008, the USDA said this morning. Marty Foreman, Doanes Advisory Service says USDA’s lowered estimate was more than the market was expecting. Ending stocks were revised down 47 million bushels from last month to 1.625 billion bushels.

The lowered production estimate was partially offset by a 50 million bushel decline in USDA's export forecast. Corn futures were called 2 to 3 cents higher today.

Based on conditions as of Nov. 1, corn yields are expected to average 162.9 bushels per acre, down 1.3 bushels from October but 9.0 bushels above last year. Despite the drop in yield from October, this yield will be the highest on record if realized. Total production will be second highest on record, only behind 2007. Within the Corn Belt, forecasted yields in Minnesota and Wisconsin increased, while Illinois, Iowa, and Michigan yields decreased.

Soybean production is forecast at a record high 3.32 billion bushels, up 2 percent from the October forecast, and up 12 percent from last year.

Based on Nov. 1 conditions, soybean yields are expected to average 43.3 bushels per acre, up 0.9 bushel from last month and up 3.6 bushels from 2008. If realized, this will be the highest U.S. yield on record. Compared with last month, yields are forecast higher or unchanged in all States except Arkansas, Georgia, Iowa, Mississippi and Texas. Increases of 3 bushels are expected in Delaware, Indiana, Kansas and Maryland.

The largest decrease in yield from the October forecast is expected in Mississippi where excessive rain during October hindered yield expectations. If realized, the forecasted yield in Alabama, Kansas, Kentucky, Nebraska, Ohio, and Pennsylvania will be a record high and the forecasted yield in Georgia, Maryland and North Carolina will tie the previous record high. Area for harvest in the U.S. is forecast at 76.6 million acres, unchanged from last month but up 3 percent from 2008.