KANSAS CITY, Mo. - 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.
Farmers will plant a record-high soybean crop while boosting the amount of corn acres by 3 percent this spring, the Agriculture Department reported.
''I think it's safe to say that it changes the entire supply and demand equation - certainly for this year and going forward,'' said Greg Wagner, senior commodity analyst at Ag Resource Company in Chicago.
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 in March, up 11 percent from last year. Soybean stocks will fall 2 percent to 1.27 billion bushels, but that figure is about 60 million bushels higher than the market had expected.
A drop in commodity prices won't mean an immediate decline in food prices.
It can take months or longer for prices to drop at the grocery store, partly because raw-ingredient costs are just a fraction of what consumers pay, with transportation and marketing costs making up the majority.
Still, the higher grain reserves are expected to keep prices down.
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 from last year.