WASHINGTON - The already-grim outlook for the nation's drought-ravaged winter wheat crop worsened in forecasts released Friday by the Agriculture Department.

With much of the harvest in full swing, production has plunged to lows not seen for decades, according to the monthly crop report. The production forecast is down 16 percent from last year's crop to 1.26 billion bushels of winter wheat.

"I'm cutting on a patch right now I probably should have abandoned," said Tom Morton, who farms in Oxford, Kan., south of Wichita. Kansas is the biggest winter wheat state.

"Part of the problem was insect damage. It got so dry, the insects were active at a time of year they shouldn't be. They got a little ahead of me and did more damage than I thought before I got there," Morton said.

The quality of his wheat looks good, but Morton's crop will be about 40 percent below average, he said.

Quality may not fare as well farther north; dry weather last month across the northern Great Plains made the winter wheat condition deteriorate, the Agriculture Department said.

The winter wheat forecast dropped 4 percent from last month, while price estimates went up 10 cents over last month to $3.60 to $4.20 per bushel. Last year's average was $3.42.

"The price for wheat is very good, but it doesn't do you any good if you can't raise the bushels," said Kendall Hodgson, who farms in Little River in central Kansas.

Hodgson is keeping his fingers crossed; he expects to start harvesting his wheat next week.

Across all varieties, this year's wheat crop is estimated at 1.81 billion bushels.

For the other major crops - corn, cotton, rice and soybeans - the forecast was unchanged.

At the same time, the outlook is improving somewhat for the nation's beef, pork and poultry producers, according to the report.

Exports were stronger than expected in the first three months of the year, and prospects look good for economic growth globally and favorable exchange rates, analysts said. While worries about bird flu have dampened chicken exports to some countries, low prices are encouraging higher exports, according to the report.

Analysts lowered the forecast for beef production, raised the forecast for pork production and left the forecast for poultry production unchanged.