Consumers could see some relief from higher food prices by late fall, if the latest government crop forecast holds up.
The U.S. Agriculture Department predicted Thursday that corn production will total a record 14.8 billion bushels. That compares with 12.4 billion bushels a year ago and it's 11 percent higher than the previous record crop in 2009. The government also predicts a record yield of 166 bushels per acre.
"We're looking at the largest corn crop this country has ever produced and larger than the previous record by over 1 1/2 billion bushels," said Chad Hart, grain market specialist and economic professor at Iowa State University. "We're looking at the potential for just a true bin-buster of a crop. There's going to be a lot of corn flying around here."
The USDA also increased an estimate for corn stockpiles at the end of this August to 851 million bushels from 801 million bushels, noting that some of this year's crop may be ready for use earlier than normal because of a fast start to the planting season.
About three-fourths of the U.S crop is in the ground this year compared to about half in a normal year, Hart said.
Corn exports between September and August 2013 were forecast at 1.9 billion bushels. The agency said it expects more demand from China.
The USDA estimates a 2012-2013 average corn cash price of about $4.60. That's about 40 cents per bushel lower than the $5 estimate the government released in February.
Lower corn prices means farmers raising chickens, hogs and cattle save money on feed and that can be passed on in lower meat prices in the grocery store.
For processed foods like corn flakes the price impact for consumers is less. About 20 cents of the average dollar spent in the grocery store pays for the farm commodity in food, Hart said. That means corn prices can move a lot at the farm level but it still has a relatively small impact on food prices because 80 percent of the cost in the food is packaging, processing, marketing and other costs.
The government has forecast an increase of 2.5 percent to 3.5 percent in overall food prices for 2012.
The lower price, however, means corn farmers earn less when they sell the crop.
John Hall, 65, who farms in central Iowa said for some the $4.60 per bushel prices is below the cost of production.
"There's a real risk to profitability in agriculture," he said. "We've had two to three pretty good years and they've probably gone away unless we have a weather situation."
The 2010-2011 average cash price for corn was $5.18 per bushel and the current year's average price is a phenomenal $6.10, making it the most profitable year U.S. corn farmers have ever seen, Hart said.
A hot dry summer with little rain could reduce yields, lower projected corn stockpiles and boost prices, but most farmers prefer a healthy crop.
"It seems you can get yourself out of a bind if you have plenty of crop to sell," Hall said. "Wishing or accepting for a smaller yield at a higher price usually doesn't turn into a workable scenario."
The USDA's Thursday forecast is the first at the beginning of the growing season and many things could affect the outcome including the weather.
Corn stockpiles have been small in the past couple of years because weather-related damage hurt production. In addition, there has been strong demand from livestock producers, ethanol manufacturers and overseas buyers. The combination of strong demand and short supplies has kept corn futures above $6 a bushel for much of this year. Futures prices fell more than 3 percent in afternoon trading, to about $5.89 a bushel.
A mild spring and ample moisture allowed farmers to get an early start on planting this year. They are expected to plant 91.9 million acres in corn. That's the most since 1937.
The Agriculture Department raised its estimate by 12 percent for all-wheat production, totaling 2.245 billion bushels from September through August 2013. That would be the highest level since the 2008-2009 season. The yield per acre was forecast at 45.7 bushels.
Wheat supplies have been ample after robust harvests in other countries pushed up global supplies.
Soybean production was forecast at 3.205 billion bushels, up from the 2011 year with higher yields more than offsetting lower harvested acres. Yield of 43.9 bushels per acre is expected for the year ending in August 2013, up 2.4 bushels from 2011. Soybean supplies are projected at 3.43 billion bushels, up 4 percent from 2011-2012.
Wheat futures were virtually unchanged, while soybean prices rose nearly 2 percent in afternoon trading.
AP Business Writer Sandy Shore contributed to this report from Denver.