The scorching drought across the U.S. has cut corn production to the lowest level in six years and soybeans to the lowest in nine years, the government forecast last week, but the corn crop is larger than expected, which may relieve tight supplies for the third year in a row.

The fall harvest is running faster than usual, but the U.S. Department of Agriculture (USDA) lowered its corn forecast by less than 1%; traders had expected a cut of nearly 4% from August. The surplus at the end of this marketing year would be the smallest since 1996 but 24% larger than the trade expectation.

The Agriculture Department cut its forecast of the soybean crop by 2% from the August figure, twice the decrease expected by traders. The department said the carryover at the end of the marketing year would be the smallest in eight years, although slightly larger than expected.

Meanwhile, the raisin crop is moving fast in California’s San Joaquin Valley, as a near perfect growing season there generated quality, though not quantity. A lighter crop and increased labor costs will impact farmers' returns.

According to the National Agricultural Statistics Service, projections for the 2012 raisin crop stand at 285,000 tons, substantially below last year's crop of 346,000 tons. As a result, the Raisin Bargaining Association board of directors voted to offer this year's crop at 95 cents/lb., 10 cents higher than last year. But even at that higher price, growers say they will make less money overall than in 2011.

Farmers have also had to offer significant increases in labor costs to attract workers. For example, pickers earned 25 cents to 27 cents per tray last year for traditionally harvested raisins. This year, they are earning 30 cents to 32 cents.

World wheat supplies, however, are only marginally lower despite the losses, says the USDA, and feed grain production also is down less than 1% compared to the August forecasts. The world wheat crop is down 5% from last year and coarse grains down 2.4%. World rice production is on par with last year.