Wednesday corn markets were bearish on the heels of the release of the USDA report, but soybean futures prices jumped. Cash corn prices for new crop ranged from $7.75 to $8 per bushel, while new crop-cash soybean prices averaged between $17 and $17.50 in Indiana.

Hurt said the report can give corn and soybean growers some insight for marketing the crops.

"As we think about marketing, there certainly are some differences between corn and soybeans," he said. "For corn, current bids into the storage season are relatively flat going across the fall and into the spring, without substantial increases or decreases. What that tells us is that storing corn still makes some sense if one believes corn prices can still rally and that there is limited concern about a major drop in prices.

"Soybeans are different because of the very large South American production. If they have a reasonable growing season, we're going to start seeing lower soybean prices by maybe January and especially February and March."

The strong cash and futures prices will help some grain producers offset drought-induced harvest losses. October grain prices also will influence the amount some insured producers will receive in indemnity payments. But the reduced yields and high prices do little to help the negative profit margins of livestock producers struggling to feed their herds.

"The livestock industry gets just a tiny bit of reprieve in the sense that corn isn't as desperately short as I think many people thought going into this report," Hurt said. "On the other hand, corn prices aren't going to fade substantially. It's going to be very difficult for the livestock industry to just hold on as cash flows are probably going to be negative for the most part."

Purdue Extension Agricultural Economist Corinne Alexander offered additional analysis of the report and a 2013 Agricultural Outlook during a free webinar archived at http://www.agecon.purdue.edu/extension/programs/lunch.asp.

The USDA's full report is available for download at http://usda.mannlib.cornell.edu/MannUsda/viewDocumentInfo.do?documentID=1046.