"Nonetheless, U.S. prices for corn, wheat, and soybeans are projected to remain historically high, above pre-2007 levels," USDA said.
Growers were projected to plant 254 million acres - second only to the record set in 2012 - of the eight major U.S. crops, wheat, rice, corn, sorghum, barley, oats, soybeans and upland cotton this year, said USDA.
Persistent Drought Brings Fear For Crop Size
With drought persisting in the U.S. Plains and western Corn Belt, there was high concern about likely yields. The winter wheat crop, grown mostly in the Plains, was most at risk from drought. USDA projected lower yields for wheat and a e percent smaller crop this year than in 2012 despite larger wheat area.
USDA devoted three pages, out of the 105 pages in its annual projections, to explaining the methodology behind its projections of yields. Its corn formula looked at 25 years of crops, including the 1988 and 2012 droughts.
USDA's projected corn yield was higher than other forecasts. A Kansas State University economist, Dan O'Brien, used 157.4 bushels an acre as the likely yield in a forecast last month. David Anderson, agricultural economist at Texas A&M, has used 150 bushels an acre as a reasonable yield that would produce a record crop.
Many analysts believe growers will plant 97 million to 99 million acres of corn, compared to the 96 million acres projected by USDA.
U.S. corn and soybean production has fallen for three years in a row. Traders have focused on bare-bones corn supplies and the need to rebuild stockpiles.
Experts say weather in late summer, when the corn and soybean crops mature, is the greatest determinant of crop size, despite the anxiety about planting crops in a dry seedbed.