Corn supply tightens for 2012; raised prices expected

Americans can expect to pay slightly higher food prices next year, given that an excessively hot summer has damaged much of this year’s corn crop. But the rise in grocery prices might not be severe because farmers are sitting on relatively large supplies ahead of the fall harvest, and demand for corn is falling. The U.S. Agriculture Department estimated today 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% of the coming yield. The price of corn jumped 26 cents to $7.14 a bushel after the report was released. That’s almost twice the price paid last year. But it’s below the record $7.99 reached in June. 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. Farmers are expected to have a surplus of 940 million bushels when the harvest begins next month, the USDA said. That’s roughly a 26-day supply of corn, slightly more than the previous month’s estimate.