Corn traders gave yesterday's Supply & Demand Report a bearish read, as they expected USDA to trim 2013-14 corn carryover by around 246 million bu. from last month. Instead, USDA trimmed carryover by "just" 55 million bu. to 1.949 billion bushels. Traders expected USDA to lower its crop projection by a steeper amount than the 135-million-bu. drop the report revealed.
At the top of the WASDE report was a note that stated, "Because planting is still underway in the Northern Hemisphere and remains several months away in the Southern Hemisphere, these projections are highly tentative. National Agricultural Statistics Service (NASS) forecasts are used for U.S. winter wheat area, yield, and production. For other U.S. crops, methods used to project acreage and yield are noted on each table."
Below the corn S&D table is this note regarding production: "Projected yield based on a weather adjusted trend, lowered to reflect the asymmetric yield response to July precipitation and the slow pace of May planting. (See Westcott and Jewison, Weather Effects on Expected Corn and Soybean Yields, USDA Agricultural Outlook Forum 2013, February 22, 2013.)"
Take a look at the Westcott/Jewison study provided at this link. It provides more perspective as to USDA's thought process when they hashed out the production side to this month's balance sheets.