According to the U.S. Department of Agriculture (USDA) in its recently released report, USDA Agricultural Projections to 2021, prices for major crops are expected to drop in the short term, as global production responds to recent high prices. But in the long run, growth is more favorable, thanks to an increasing 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 have the most impact on the wallet. The projection is that 94 million acres of corn will be planted this spring, which is the most corn 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. The USDA predicts that the price will decline to $5 per bushel versus this year's average bushel price of $6.20. The record high hit last summer at a fraction below $8 per bushel.

Corn is used for everything from livestock feed, sweeteners, packaging and of course, ethanol--and many blame the short supply over the past couple of years as fueling the dramatic increases we have all weathered. The report says that the strengthening global food demand--and demand for biofuel--will probably keep net farm income at historically high levels through 2021, with a slight dip in prices in the short term.

The bad news is that the USDA sees a decline in broiler (poultry) supply this year, which means prices will rise. While it does suggest that after this year, supplies will grow, the supply of beef will also decline for the next two years, but in 2017, we should see a record level of supply (and prices will hopefully then fall).

As for the U.S. economy, it is predicted to grow at an average rate of 2.5% over the next decade. This slower growth will cut the U.S. share of global domestic product (GDP) by 2% (from 26% to 24%) by the year 2021. Unfortunately, that also means that employment gains may be slow as well.

The projections for the report were prepared during October through December, 2011, and are based on the assumption that there are no domestic or external shocks that would affect global agricultural markets. To read the full report, visit: www.ers.usda.gov.

Source: Food Nutrition & Science, from the Lempert Report