Global crop prices will retreat sharply this year as farmers around the world expand production, bringing stability back to commodity markets and easing food inflation fears, the U.S. government forecast on Thursday. After two years of razor thin stocks, world crop supplies, led by wheat, are recovering.
“Certainly the high prices that we saw last year have prompted a global production response for most commodities,” USDA Chief Economist Joe Glauber told the agency’s annual outlook forum.
“This should help relieve some of the volatility that have roiled markets over the past five years and improve prospects for future livestock expansion,” he said.
Corn prices, a key barometer for farmers, could retreat 20 percent this year to around $5 a bushel while farm income would shrink 11.5 percent, the USDA forecast. There are still a number of uncertainties in the forecast, Glauber noted, citing concerns about drought withering crops in South America and in the southern United States.