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By Mark Weinraub
WASHINGTON, July 12 (Reuters) - U.S. spring wheat production will fall to a 15-year low, the government said on Wednesday, as crop development in top production state North Dakota has been crippled by searing heat and scant rains throughout June and July.
The U.S. Agriculture Department also raised its corn and soybean harvest forecasts despite a late start to planting and colder-than-usual temperatures during the spring that raised concerns about crop health.
Corn, soybean and wheat futures all dropped sharply after the report was released before quickly recovering to near pre-report levels. MGEX spring wheat rebounded to positive territory, trading near session highs.
The government in its monthly supply and demand report pegged the harvest of spring wheat other than durum at 423 million bushels on a yield of 40.3 bushels per acre. Analysts had forecast spring wheat production at 416 million bushels, based on the average of estimates given in a Reuters poll.
USDA raised its estimate of the winter wheat crop to 1.279 billion bushels, near the high end of a range of analysts’ forecasts, from its June forecast of 1.250 billion bushels. The hard red winter wheat crop was pegged at 758 million bushels, 15 million bushels higher than USDA’s June outlook.
The government forecast total wheat production of 1.760 billion bushels, which would be the smallest since a harvest of 1.606 billion bushels in 2002.
For soybeans, USDA surprisingly raised its 2017/18 harvest outlook to 4.260 billion bushels, the high end of market forecasts and 5 million higher than its June estimate. Soybean yields were unchanged at 48.0 bushels per acre.
The 2017/18 corn crop was pegged at 14.255 billion bushels, slightly above the high end of analysts’ forecasts. The corn yield outlook was unchanged at 170.7 bushels per acre.
Heat across key growing areas raised the prospect of cuts to the corn and soy harvest outlook in next month’s report.
“With the weather that we have had, I think the trade is anticipating the yields will be something less than what we have now,” said Don Roose of U.S. Commodities.
USDA trimmed its outlook for 2016/17 soybean ending stocks by 40 million bushels to 410 million bushels, largely due to rising export forecast. Soybean ending stocks for 2017/18 were lowered to 460 million bushels.
USDA raised its 2016/17 corn ending stocks view to 2.370 billion bushels. New-crop corn stocks were raised to 2.325 billion bushels.
Additional reporting by Tom Polansek in Chicago; Editing by Andrea Ricci and Phil Berlowitz