USDA cuts forecast for corn supplies in 2012, keeping food prices higher through next year

Americans can expect to pay slightly higher food prices next year, because of expectations that an unseasonably hot summer damaged much of this year’s corn crop. But the rise in grocery prices might not be severe because farmers are sitting on larger supplies ahead of the fall harvest, and demand for corn is falling. The U.S. Agriculture Department estimated Thursday that the fall harvest won’t yield as much corn as first estimated. High temperatures in key U.S. corn-growing states have damaged about 4 percent of the coming yield. Corn is used in everything from beef to cereal to soft drinks. It typically takes six months for a change in corn prices to affect products on supermarket shelves. Traders worry that grain shortages could return next year because of the damaged crops. This year’s harvest will still be larger than last fall’s harvest of 12.45 billion bushels. In the spring, farmers planted the second-largest crop since World War II. And the supply squeeze won’t be as severe as it might have been. High prices have led ranchers to cut their orders and seek alternative feeds for their livestock, such as wheat. Ethanol producers have also cut demand...more