Corn futures surged more than 5% after the US cut official forecasts for this year's harvest, citing dry weather in much of the corn belt.

The US Department of Agriculture cut by 2% to 12.1bn bushels its estimate of the country's 2008 corn harvest, putting it 1bn bushels behind last year's crop.

The reduction was blamed on crop stress caused by sparse rainfall. "August rainfall total were less than 25% of normal at several Midwestern locations," the USDA report said. Yields in the big three corn-producing states, Illinois, Indiana and Nebraska were now expected to fall behind those of last year.

The immediate market reaction in Chicago was to send December corn futures up by their limit of $30 to $563.25 a bushel.

However, the prices of other major grains, including wheat and rice, fell after a separate USDA report increased global production forecasts made in August.

The department raised by 1.2m tonnes to nearly 432m tonnes its estimate for the global rice harvest next year, reflecting sharply higher hopes for Thailand's harvest.

Wheat farmers would produce, at 676.3m tonnes, 5.5m tonnes more next year than the USDA predicted last month. Global stocks would end the year at 139.9m tonnes, 3.7m tonnes more than predicted in the August report. Upward revisions to forecasts for wheat harvests in the European Union, Russia and the Ukraine more than offset a decline in hopes for Australian production.

In Chicago, December wheat closed down $0.07 at $719.25 a bushel, with November rice futures down $0.41 at $19.08 per hundredweight.