The source of the reduced projections is drought in southern Brazil. And the result has been a spike in soybean prices.
In the country, cash prices, too, have risen. Grain handling facilities in the Midwest are reporting a spike in farmer selling of both old and new crop soybeans.
The rally in soybean prices was triggered by the continuing hot and dry weather in South America. Fields in the critical pod-filling stage have gone up to six weeks without rain. As a result, analysts are predicting yield losses of up to 35 percent in some areas.
The weather news from South America has led some large non-commercial traders in the U.S. to repurchase contracts on which they were holding short positions, helping push soybean prices higher.