Canada and the European Union joined countries facing a disappointing corn harvest after heat and drought cut yield prospects, as already highlighted in Ukraine and the US.

The US Department of Agriculture cut by 1.1m tonnes to 11.7m tonnes its forecast for the Canadian corn harvest, noting reports that in some regions "hot and dry conditions in July stressed the crop, resulting in poor pollination".

The downgrade implies a rise of less than 8% in Canada's corn production, despite a rise in sowings of nearly twice as much.

The USDA also sliced by 4.4m tonnes to 57.1m tonnes its forecast for the EU crop - the world's fourth biggest after US, Chinese and Brazilian harvests – also citing "summer heat and drought damage".

'Moisture stress'

"Yield potential has been falling rapidly in the EU since July when extremely high temperatures inhibited pollination and drought limited kernel growth in much of the EU's corn belt," the USDA said, following a crop tour to some eastern growing countries.

"The primary corn-growing areas have all struggled from excessive heat and moisture stress this season," dashing expectations of a "bumper crop" which appeared likely earlier in the season.

In Hungary, "much of which has seen no significant rainfall since July", production is seen falling 38% year on year to 5.0m tonnes.

The French crop, the EU's biggest, was downgraded by 1.0m tonnes to 15.5m tonnes, putting a decline from last year's result on the cards.

Export implications

The fresh estimate for the overall EU harvest implied a 12.6% drop from last year's strong result, which enabled the bloc to achieve exports of 3.2m tonnes in 2011-12, the highest in 40 years.

Indeed, the USDA cut to a seven-year low of 500,000 tonnes its forecast for EU corn shipments in 2012-13.