This report was updated 3-31-2010 at 3:40 p.m. Central time.

U.S. livestock producers can expect cheaper feed prices this year if the outlook for record corn and soybean seedings combines with drier weather this spring, analyst say.

The nation’s farmers will increase corn plantings by 2.316 million acres, or 2.7 percent, to an estimated 88.798 million acres in 2010, the USDA said in its annual Prospective Plantings report today.

Corn seedings at the projected level would be the second-highest since 1946, according to USDA data. Soybean plantings are projected to rise 647,000 acres, or 0.8 percent, to a record 78.098 million acres, the USDA said.

Combined corn and soybean plantings, at an estimated 166.9 million acres, would be up 1.8 percent from 2009 and an all-time high, based on USDA data.

The plantings survey, along with a separate USDA report today that showed higher than expected corn stockpiles, fueled bearish sentiment in grain markets, sending corn futures in Chicago to six-month lows.

Corn and soybean futures may decline further if Midwest farmers can return to their fields in timely fashion and avoid the rain delays of the past two springs, analysts said.

Corn supply “is going to get a little burdensome, potentially,” said Dale Durchholz, an analyst with AgriVisor, L.L.C., said during a media briefing hosted by CME Group following the reports.

December corn futures may fall to $3.50 a bushel by June “if planting goes well,” Durchholz said. “We could see December corn trade as low as the $3 mark,” he said, though “weather is still going to be the big determinant.”

In trading today, December corn futures fell 7 ½ cents to $3.76 ¼ a bushel, the lowest closing price since late September. December corn is down almost 20 percent since rallying in June to $4.68, a high for the past 12 months.

November soybeans fell 8 ½ cents to $9.18 a bushel.

The USDA’s corn and soybean forecasts fell short of trade expectations, with analysts expecting plantings at about 88.941 million acres, according to a Dow Jones Newswire survey. Analysts anticipated soybean plantings of 78.55 million acres.

Still, coming off record harvests in 2009, U.S. livestock feeders probably will be looking at ample corn and soybean meal supplies this year, analysts say.

Also today, the USDA said U.S. corn stocks as of March 1 totaled 7.69 billion bushels, up 11 percent from the same date in 2009.

Higher expected corn acreage reflects lower winter wheat seedings and an outlook for improved financial returns, the USDA said in today’s plantings report. USDA acreage estimates were based on a survey of about 86,000 farm operators during the first half of March.

If wet weather doesn’t impede planting efforts the next two months, corn seedings may ultimately rise above the USDA forecast, Allendale Inc. analyst Joe Victor said, citing historical patterns.

“If history repeats itself, you’ll have larger corn acreage in June by 1.7 million to 1.8 million acres,” said Victor, who was also speaking during the CME media briefing today.

Illinois, Kansas, Missouri and Ohio are expected to have the largest corn increases, with each forecast to boost plantings by at least 300,000 acres. Iowa and Texas are expected to have the largest corn plantings declines, at 200,000 acres and 150,000 acres, respectively.

For soybeans, Illinois, Iowa, Kansas, Nebraska and North and South Dakota are projected to raise plantings by more than 100,000 acres each. The largest decreases are expected in Georgia and North Carolina, with plantings in both expected to drop 150,000 acres.

Read the full report.