If the latest government crop forecast holds up consumers in the fall could see a drop in food prices. The U.S. Department of Agriculture is currently predicting that corn production will increase from 12.4 billion bushels one year ago to 14.8 billion bushels in 2012, a new record yield of 166 bushels per acre.
The department also increased its estimate for corn stockpiles for the end of August to 851 million bushels, up from 801 million bushels. The increase in stockpiles comes after farmers were able to get an early start on planting because of warmer than normal temperatures.
Upon news of the increased production corn prices fell by 3 percent in afternoon trading, ending at $5.89 per bushel.
While the forecast may show promise for food prices experts warn that a hot, dry summer could quickly change the forecast.
Among products that could benefit from the lower corn prices are cereal, soft drinks that use sweetened corn syrup and even beef and pork as feed for animals becomes less expensive.
The higher yield would also help corn stockpiles which have fallen in the last several years as weather-related damage has hurt production in many parts of the United States and demand from livestock producers, ethanol manufacturers and overseas buyers, specifically in China has continued to soar.
With a quick start to the spring and enough moisture farmers in 2012 are expected to plant 91.9 million acres of corn, the most since 1937.
In the meantime soybean supplies are expected to be “critically tight” with the cost per bushel ricing by 1.4 percent in afternoon trading upon news of a 43.9 bushels per acre yield with 3.205 billion bushels predicted for the year ending in August 2013.