Food prices in U.S. may fall as corn crop grows
7/1/2011ST. LOUIS -- U.S. food prices may ease later this year now that farmers have planted the second-largest corn crop in nearly seven decades.
The U.S. Agriculture Department said Thursday that the size of this year's corn crop will be 92.3 million acres. The only crop larger in the past 67 years was planted in 2007.
Many analysts had worried that wet weather would cut the number of corn acres. But record-high prices are encouraging farmers to use more acres for corn, and less for crops such as soybeans and wheat.
More expensive grain has led to food price increases this year. That could ultimately make everything from beef to cereal to soft drinks more expensive at the supermarket. For all of 2011, the USDA predicts food prices will rise 3 percent to 4 percent.
A good outlook in August would likely drive corn prices lower this fall. That could ultimately ease food inflation. It typically takes six months for changes in commodity prices to affect retail food prices in the U.S. Analysts say consumers could see some relief at the supermarket by early 2012.
Farmers chose to plant corn at the expense of this year's soybean crop. They used only 75.2 million acres of soybeans, about 3 percent less than last year. Worries over a shortage have pushed the price of corn to a record $7.99 a bushel.