The USDA’s latest Crop Production report, released Friday morning, projects a corn harvest of 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.

The projection has been progressively smaller though the last few reports, sparking a rally in corn prices as traders expect strong demand for exports and ethanol production.

Based on conditions as of October 1, yields are expected to average 155.8 bushels per acre, down 6.7 bushels from the previous month and 8.9 bushels below last year's record of 164.7 bushels.

Forecasted yields decreased from last month throughout much of the Corn Belt and TennesseeValley. Illinois showed the largest decline, down 14 bushels per acre. Indiana and Iowa are both down 10 bushels from the previous month, while Missouri and Nebraska declined 9 bushels per acre. Area harvested for grain is forecast at 81.3 million acres, up less than 1 percent from the September forecast.

The full report is available online from USDA.