The latest reports from the U.S. Department of Agriculture are lowering the forecast for this year’s corn crop, but raising the expected use of corn for ethanol.

Corn production is now forecast at 12.5 billion bushels, down 1 percent from the October forecast and down 4 percent from last year’s record production of 13.1 billion bushels. The reason for the decrease is lower than expected yields, especially in key producing states like Missouri and Nebraska. Record high yields are still forecast for several states including Minnesota and Wisconsin.

On the supply-demand side, USDA increased corn use for ethanol in the coming year by 100 million bushels, citing record October ethanol production and favorable ethanol producer margins. “Ethanol prices continue to track higher with corn prices, supporting returns for ethanol producers. Although small relative to domestic usage, higher ethanol exports and lower imports are also expected to add to corn use for ethanol with high sugar prices limiting the availability of ethanol from Brazil.” Corn ending stocks were lowered by 75 million bushels and exports were lowered by 50 million.