ARLINGTON, Virginia U.S. farmers will plant massive corn and soybean crops this spring but it may take more than two years to rebuild razor-thin stocks and quell the global surge in grain prices, the U.S. Agriculture Department said on Thursday.
With growing concern among world governments over rising food prices, the U.S. corn stockpile is forecast to be the smallest since 1996 and soybeans would amount to a mere two-week supply by time this year's crops were ready for harvest.
"While it is often said the cure for high prices is high prices, even with additional supplies expected this year, it is likely that the tight stocks-to-use situation will not be entirely mitigated over the course of one or even two growing seasons," USDA Chief Economist Joseph Glauber told the department's annual outlook conference on Thursday.
The planting forecasts were unchanged from the department's projections made earlier this month, surprising some analysts that the department didn't trim the numbers somewhat.
"It should be bullish all around even though the USDA stuck to their higher estimates than I probably would have done," said Jack Scoville, analyst for Price Futures Group.
"It seems to me they're implying some very strong demand here because the ending stocks estimates remain pretty tight, really across the board," he added.
U.S. farmers will plant the second largest corn crop since 1944 at 92 million acres and plant 78 million acres with soybeans, a record amount.
USDA projects the corn crop to be a record 13.73 billion bushels, down from the initial estimate of 13.755 billion. The U.S. soy crop will reach 3.345 billion bushels, down from USDA's initial estimate of 3.355 million.
The USDA pegged 2011/12 U.S. corn ending stocks at 865 million bushels, and soybeans stocks at 160 million bushels.
Ethanol makers are expected to consume a record 5 billion bushels of corn this year, or some 36 percent of the harvest.
Despite criticism that using food for fuel was helping to drive up prices, Agriculture Secretary Tom Vilsack told the conference the government had no intention of scaling back on ethanol.
"There is no reason for us to take the foot off the gas," Vilsack told the conference. "This is a great opportunity for us because we can do it all, make no mistake about it."
Despite a recent pullback, agricultural commodity prices have surged during the last year to their highest levels since the 2008 global food scare following catastrophic storms and droughts that have slammed the world's leading agriculture countries.
Tight global commodity stockpiles have pushed food prices higher, making it harder for the poor and contributing to political unrest in countries with high poverty rates and unemployment.
The turmoil has highlighted the need for farmers in the United States, the world's biggest exporter, to grow larger crops this year and replenish tight supplies.
(Reporting by Charles Abbott and Christopher Doering; Writing Russell Blinch; Editing by Lisa Shumaker)