U.S. corn futures traders and analysts are expecting the government to reduce its domestic crop projection Friday, with a corresponding decline in new crop ending stocks.

The U.S. Department of Agriculture will release its supply and demand report Friday at 8:30 a.m. EDT. Analysts say while it will be far from the final word on the crop, it will carry more weight than previous estimates because the growing season is in its final stages.

Analysts surveyed by Dow Jones Newswires on average peg the USDA's projected corn crop at 13.199 billion bushels, with a yield of 163.1 bushels per acre. That would be below the USDA's August estimate of 13.365 billion bushels at a record 165 bushels per acre.

The 25 analyst estimates ranged from 12.880 billion to 13.410 billion bushels, with yields ranging from 160 to 165.9 bushels per acre.

The  2009 record crop totaled 13.110 billion bushels at 164.7 bushels per acre.

Farmers and grains analysts say the crop has faced several problems this year that have varied by region. Parts of the Midwest, particularly Iowa, suffered through a wet early summer that washed away nitrogen, a key nutrient, and in some cases flooded out low-lying areas of fields. Many areas endured a dry August that stressed crops, and the heart of the corn belt faced hot night-time temperatures that didn't give the crop proper chance to "rest," they say.

The season's fast growing season could also limit yields, analysts say, as the crop has reached maturity and stopped growing before kernels have had a chance to reach their maximum size.

Still, analysts say the USDA could be conservative in cutting the size of the crop. Informa Economics, for instance, said in a recent report it expects the crop to ultimately yield 158.5 bushels per acre. But it expects the USDA on Friday to only lower the yield to 164.8 bushels per acre.
A few analysts expect little or no reduction.

"I can't ignore the fact the U.S. corn good and excellent combined crop condition declined only 2 points from early August to early September," said Citigroup analyst Terry Reilly, who projected the yield at 165.9 bushels per acre. He noted that the USDA has raised its yield from August to September in 11 of the past 20 years.

Those projecting a reduced crop say it will amplify an increasingly tight supply situation.
Analysts on average projected the 2009-10 corn carryout at 1.412 billion bushels, down slightly from the USDA's August estimate of 1.426 billion and below the 2008-09 carryout of 1.673 billion. Carryout is the amount of grain in storage at the end of the marketing year.

Estimates ranged from 1.350 billion to 1.476 billion. Analysts note increased export demand thanks to the Russian drought, which has sent buyers looking elsewhere. Most of that demand is for the 2010-11 marketing year, however.

Jerry Gidel, analyst for North America Risk Management Services, said stronger-than-expected June ethanol output and a late August uptick in production "suggests that old-crop corn demand could decrease 2009/10's carry-in by 25 million."