USDA slashed U.S. corn production by 1.82 billion bushels in the July 11 crop report estimate on news that Midwest yields were dropping daily due to extreme heat and drought.

With the prospect of more hot weather in the forecast, market observers are now wondering if soybeans could be the next shoe to drop.

USDA dropped projected U.S. corn yields by a stunning 20 bushels per acre in the report, to 146 bushels, and lowered U.S. corn production from 14.79 billion bushels to 12.97 billion bushels, which puts the 2012-13 stocks-to-use ratio to 9.3 percent.

It could get worse, according to Jim Bower, president of Bower Trading, Inc., speaking at a Minneapolis Grain Exchange press briefing.

“The kicker is that normally, a large percentage of the time, the USDA numbers on corn production starts to come down after July. We could have the potential to see a sub-140-bushel yield on the U.S. corn crop unless the situation turns around very quickly. We are running out of time and water in some key areas.”

Bower said he’s been “shocked” at the poor yield potential of corn, “particularly in Illinois and Indiana. We have some customers who are great producers and long-time customers of Bower Trading who have fields being zeroed out already. I’ve been in this business a long time, and the last weekend was the most severe condition I’ve ever seen on the corn crop in the eastern southern belts.”

Projected U.S. corn ending stocks of 1.183 billion bushels came in just below the average trade estimate of 1.279 billion bushels, noted Bower, “and certainly it’s grinding its way lower.”