Futures surge to highest since 2014 as USDA cuts its supply outlook

* USDA pegs U.S. corn, soy harvests below expectations

* USDA cuts grain and soybean stocks

* Wheat futures at 6-year high; corn, soy at 6-1/2 year highs (Rewrites throughout, adds quote, adds USDA data, updates prices, changes byline, changes dateline from HAMBURG)

CHICAGO, Jan 12 (Reuters) - U.S. corn, soybean and wheat futures surged to fresh multi-year highs on Tuesday after the U.S. Department of Agriculture (USDA) said U.S. corn and soy crops were smaller than anticipated and stocks of key crops were thinner that previously thought.

Corn jumped by as much as 5%, with several contracts up their 25-cent-per-bushel daily trading limits. Soybeans added nearly 4% and wheat gained almost 5%.

The surge took prices to highs not seen since 2014.

The USDA pegged the 2020 U.S. corn at 14.182 billion bushels based on an average yield of 172.0 bushels per acre and soybean production at 4.135 billion bushels on a yield of 50.2. All were below average trade expectations, particularly corn.

The USDA also forecast end-of-season corn and wheat supplies below trade estimates, and confirmed investor fears of the tightest U.S. soybean stocks in seven years.

"Nobody was expecting corn production to drop like that," said Jack Scoville, analyst with The Price Group. "They (USDA) underestimated the damage from the drought and the derecho and probably overestimated some of the better areas."

Chicago Board of Trade (CBOT) March corn was locked up the daily 25-cent limit at $5.17-1/4 a bushel at 12:00 p.m. CST (1800 GMT), the highest level for a most-active contract since May 2014.

March soybeans jumped 50 cents to $14.22-1/2 a bushel, the highest for a most-active soy contract since June 2014. CBOT March wheat gained 32 cents to $6.66-3/4 a bushel, the highest since December 2014.

Concerns about available supplies from key exporters added support to grains.

Argentine farmers said on Monday they would continue their ban on selling crops despite the government's decision to amend the corn export suspension. Russia, the world's top wheat exporter, is considering raising a previously announced export tax on the grain. (Additional reporting by Michael Hogan in Hamburg and Naveen Thukral in Singapore Editing by Robert Birsel and Marguerita Choy)