ST. LOUIS — The government predicted that corn and soybean reserves will be higher than initially estimated, easing some concerns about rising food prices.
The U.S. Agriculture Department predicted Thursday that there will be about 123.1 million metric tons of corn left over after this year's harvest. That's up from an estimated 122.5 metric tons in last month's report. There should be about 58.3 million metric tons of soybeans left over, compared with last month's estimate of 58.2 million.
The new estimates should drive crop prices lower in coming weeks as traders worry less about tighter reserves, said John Sanow, a commodity analyst with Telvent DTN in Omaha, Neb.
Corn prices dropped 8 percent to $6.71 a bushel in morning trading while soybean prices fell 6 percent to $13.2675 a bushel.
Lower reserves caused global grain prices to double this year. Corn was trading for just $3.50 a bushel as recently as this summer. But growing demand from ethanol producers and consumers in developing countries like China has stripped supplies. The government predicts corn reserves this year will be at their lowest level in 15 years.
The government estimates that food prices could rise more than 3 percent this year as processed food makers and grocery stores pass along their higher costs for raw ingredients. Still, crops like corn and soybeans account for just 10 percent of the raw ingredients used in processed foods; it can take months for higher prices to reach consumers.