Grain prices soared Friday after a government report showed that this year's corn harvest might be smaller than expected.
The U.S. Department of Agriculture report built on worries that grain and bean supplies will be tight this year, as farmers struggle to meet demand from the biofuels and livestock industries. The corn harvest will be 4 percent smaller than expected, while the soybean harvest will be 2 percent smaller.
The Kansas corn crop was expected to set a state record, but is down a little because yield per acre was less than expected. The state corn crop is expected to be the second-highest ever at 598.3 million bushels.
Local grain prices shot up, as well. The TMA Grain's Whitewhate elevator closed Friday offering to buy corn for $4.67 a bushel, up 30 cents. That's a nearly 7 percent gain from Thursday.
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Soybeans rose even more sharply, from a closing price of $9.78 a bushel in Whitewater on Thursday to $10.48 on Friday — a slightly more than 7 percent gain.
The USDA often revises its harvest estimates with several reports in October, but Friday's report carried extra weight because it builds on longer-term worries that a corn supply pinch is in the offing, said Darin Newsom, senior analyst with Telvent DTN.
With overseas grain supplies down because of drought and other factors, the U.S. harvest is increasingly stretched by demand from ethanol factories and livestock producers, Newsom said.
Because of those deeper issues, Friday's price won't likely be the peak that corn reaches this year.
"The indication is that we'll just continue to move up from now," Newsom said. "There is literally nowhere else in the world to turn to fill these supplies."
The USDA forecast that the U.S. corn harvest would be 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.
Soybean production is forecast at a record high 3.41 billion bushels, down 2 percent from September, but up 1 percent from last year.