U.S. retail food prices rose faster than the general inflation rate in 2011 and are projected to do so again in 2012, says USDA in its recently released USDA Agricultural Projections to 2021. These baseline projections offer a glimpse into what is likely to happen to the prices we pay at the supermarket.
According to USDA, prices for major crops are projected to decline in the short term as global production responds to recent high prices. However, long-term growth is more favorable, thanks to a growing global demand for agricultural products, including the continued U.S. ethanol demand for corn and the EU biodiesel demand for vegetable oils.
The forecast for the corn supply may well have the most impact on our pocketbooks. The projection is 94 million acres of corn will be planted this spring – that is the most planted since 1944, and will put corn stocks next summer at double the amount this year. The supply (and price) of corn has a dramatic effect on just about all foodstuffs. USDA predicts that the price will drop to $5/bu. vs. this year's average bushel price of $6.20. The record high hit last summer at a fraction below $8/bu.
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