Food prices expected to fall
Farmers are expected to boost corn and soybean acreage to historic highs this year, boosting overall grain reserves to unexpectedly high levels and driving down food prices, according to an Agriculture Department estimate released Wednesday.
Farmers will plant a record-high soybean crop while boosting the amount of corn acres by 3 percent this spring, the Agriculture Department reported. The higher-than-expected supply forecast caused a steep drop in crop futures on the Chicago Board of Trade.
Soybean and corn reserves were being drained to dangerously low levels during the past two years because of rising demand from overseas markets and the U.S. ethanol industry, pushing crop prices to record highs in 2008. But with the global recession draining demand from the grain market, farmers are again poised to grow a crop big enough to cause surpluses to grow.
Corn stocks are expected to total 7.69 billion bushels from March, up 11 percent from last year. Soybeans stocks will fall 2 percent to 1.27 billion bushels, but that figure is about 60 million bushels higher than the market had been expected.
Futures prices dropped sharply after the USDA estimates were released.
Farmers plan to plant a record 78.1 million acres of soybeans in 2010, and 88.8 million acres of corn. The wheat crop is estimated at 53.8 million acres, down 9 percent. The cotton crop is forecast to rise 15 percent to 10.5 million acres.
In 2008, Illinois produced $4 billion in soybeans and $8 billion in corn, ranking it as the second-largest soy- and corn-producing state in the U.S. Missouri produced $1.7 billion in soy and $1.5 billion in corn, ranking it sixth and ninth respectively.
Filed under: money by Specialist