Nov. 10 (Bloomberg) -- The U.S. corn crop will be 0.7 percent smaller than forecast a month ago, the government said, as heavier-than-normal rainfall and freezing temperatures in October helped to reduce yield potential.

The harvest will total 12.921 billion bushels, down from 13.018 billion projected last month and second only to the 2007 crop of 13.038 billion, the U.S. Department of Agriculture said today in a report. The average estimate of 28 analysts surveyed by Bloomberg News was for 12.962 billion bushels.

“The crop has a little more downside potential because higher yields have not been verified by actual harvest results,” said Shawn McCambridge, a senior grain analyst for Prudential Bache Commodities LLC in Chicago. “This report will be met with increased skepticism” because much of the crop is vulnerable to additional weather losses from the delayed harvesting, McCambridge said before the report.

The report was released before the start of trading on the Chicago Board of Trade, where corn futures for December delivery rose 19 cents, or 5.2 percent, to $3.86 a bushel yesterday. The most-active contract has climbed 28 percent from a three-year low of $3.02 on Sept. 8.

Today’s estimate is the fourth to be based on field surveys and farmer interviews for this year’s crop

Tyson, Smithfield

Reduced supplies of corn may increase expenses for meat companies such as Tyson Foods Inc. and Smithfield Foods Inc. Makers of corn-based ethanol such as Poet LLC and Archer Daniels Midland Co. may also see reduced profit margins.

The department lowered its yield forecast to 162.9 bushels an acre from 164.2 bushels estimated last month. Farmers harvested 153.9 bushels an acre last year. Analysts surveyed by Bloomberg were expecting 163.5 bushels in the latest forecast, on average.

About 79.3 million acres (29.3 million hectares) will be harvested, unchanged from October, the USDA said. A year ago, 78.6 million acres were harvested.

Unsold supplies before next year’s harvest will total 1.625 billion bushels, down 2.8 percent from 1.672 billion forecast a month ago, the department said. Analysts expected 1.635 billion bushels, on average. Supplies at the start of the marketing year were 1.674 billion bushels, according to the USDA.

Feed Use

The amount of corn used in livestock feed in the marketing year that began Sept. 1 will be 5.4 billion bushels, unchanged from last month and more than 5.25 billion in the previous year, the department said. About 2.1 billion bushels will be exported, down from 2.15 billion estimated last month and up from 1.86 billion last year, the USDA said.

“Exports have been slow,” McCambridge said. “If prices move higher because of a smaller crop, the demand could shift to cheaper and abundant feed-wheat supplies.”

Corn used to produce ethanol will total a record 4.2 billion bushels, unchanged from last month’s forecast and up 14 percent from an estimated 3.677 billion consumed in the previous marketing year.

The USDA said corn prices will average $3.55 a bushel in the current crop year, up from $3.35 projected in October and down from $4.06 in the previous year.

World Production

World corn production in the crop year that began Oct. 1 will be 789.7 million metric tons, down from the month-ago forecast of 792.5 million tons and an estimated 791.9 million harvested last year, the USDA said.

China, the world’s second-biggest producer, will harvest 155 million metric tons, unchanged from the October estimate, the USDA said. A year ago, the country produced about 165.9 million tons, according to the department.

Global consumption is forecast at 803.3 million tons, up from 803.1 million projected last month and from an estimated 775.7 million last year. Inventories before next year’s harvest will total 132.4 million tons, down from 136.3 million tons predicted a month ago and from 146 million estimated for this year, the USDA said.

Corn is the biggest U.S. crop, valued at a record $47.4 billion in 2008. The U.S. is the largest producer and exporter of the grain.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net

Last Updated: November 10, 2009 08:40 EST