Drought-beset China has cut its corn forecast – but by far less than investors had predicted, providing little support for beleaguered market prices.

The China National Grain and Oils Information Centre (CNGOIC), the country's grain think tank, trimmed by 1m tonnes to 165.5m tonnes its estimate for corn output this year.

However, the estimate, while signalling that the centre was braced for a fall in output from last year's record 165.9m-tonne harvest, remained well above recent trade forecasts.

December corn traded 1.5 cents lower to $3.06 a bushel in Chicago, only 4 cents above a contract low. 

'Tight supplies' 

Last week, Informa Economics cut by 3m tonnes to 156.5m tonnes its forecast for the corn harvest.

Shanghai-based analysts group JC Intelligence pegged the harvest at 145.9m tonnes, adding that the poor crop may stoke Chinese demand for foreign purchases.

"We expect supplies to get tight after next May when some areas in the south could face shortfalls... which could prompt imports," said Li Qiang, chief analyst at JC Intelligence said.

China has some buffer from a large stockpile built up following last year's harvest.

Drought damage 

Many of China's growing areas have been badly hurt by drought.

The CNGOIC also cut its forecast for wheat output by 550,000 tonnes to 114.95m tonnes, and its estimate of the soybean crop by 500,000 tonnes to 14.50m tonnes.

Some observers have said that corn has been affected by the dry weather co-inciding with the corn-filling stage, leading to output cuts of potentially 30% in Heilongjiang and Jilin, the top two growing areas.