The expected size of this year’s drought-ravaged US corn crop has been slashed again in the latest official forecast from the US Government.

The USDA’s latest World Agricultural Supply and Demand Estimates report, released on Friday night, cuts estimated corn production by a further 17pc from last month’s forecast.

The USDA now expects that corn production will total 10.8 billion bushels.

That is 13 percent lower than last year, and, if realised, will represent the lowest US corn production since 2006.

Based on conditions as at August 1, the USDA said it expected yields to average 123.4 bushels per acre, down by 23.8 bushels from 2011.

Last month, the USDA was predicting corn yields to average 146 bushels per acre.

US corn farmers had expected a record crop earlier this year when they planted 96.4 million acres, the largest area since 1937.

However severe drought across the Midwest has dramatically altered the outlook.

The USDA now expects the total area harvested to be 87.4 million acres.

That is 2pc lower than its June forecast.

Chicago Board of Trade Corn futures reached a record of US 844c a bushel as the crop report was released on Friday night, capping a 60pc rise over the past two months. 

CBOT futures have since retreated from that high on expectations the record price-levels will curb demand.

The USDA expects soybean production to total 2.69 billion bushels, 12pc below last year.

The expected average yield of 36.1 bushels per acre would be the lowest since 2003.