USDA also lowered its soybean supply outlook for the 2015/16 crop year due to increased domestic usage and raised its view of corn supplies due to lower ethanol production in its monthly supply and demand report.
The government forecast winter wheat production at 1.505 billion bushels, up 33 million bushels from the outlook it issued last month. It raised its average yield outlook to 44.5 bushels per acre from 43.5 bushels per acre. In Kansas, the largest production state for winter wheat, the average yield was raised by 5 bushels to 37 bushels per acre.
The harvest forecast topped expectations and wheat futures <0#W:> sank to session lows after the report was released.
But the storms, which broke a drought in parts of the Plains, also raised disease pressure on the crop and likely caused lodging in some fields.
"The wheat numbers were high, and we are seeing some of the buying come out of the market," said Jack Scoville, analyst for the Price Futures Group. "There is some damage (to U.S. wheat) out there, but they (USDA) wouldn't have had a chance to get that into the report."
USDA pegged 2015/16 domestic end stocks for wheat at 814 million bushels, up from 793 million in May.
For corn, USDA raised its 2015/16 end stocks view to 1.771 billion bushels from 1.746 billion bushels and its 2014/15 end stocks view to 1.876 billion bushels from 1.851 billion bushels. USDA cited a 25 million bushel cut to the outlook for corn used for ethanol as the reason for the increased corn supplies.
Soybean end stocks for the 2015/16 marketing year were cut by 25 million bushels to 475 million bushels. For 2014/15, USDA cut soy end stocks to 330 million bushels from 350 million bushels.
The government boosted its expectations for domestic soybean crushings and soymeal use despite an avian flu outbreak in the Midwest that has forced poultry producers to cull around 40 million birds. Corn used for feed also was left unchanged.
USDA also raised its estimate for 2014/15 Brazil corn production by 3 million tonnes to 81 million tonnes due to increased plantings for the country's second crop. It raised its outlook for 2014/15 Argentine soybean production to 59.5 million tonnes from 58.5 million tonnes.