US corn prices may enter decade-long slump

Corn prices may remain below US$4 for a decade, as US production are able to meet demand, according to analysts from the Congressional Budget Office (CBO).

The average cash price will fall to US$3.65 in the 2012-13 marketing year, and will increase no further than US$3.94 through 2019, said the CBO, a federal agency within the legislative branch of the US government.

CBOT corn futures closed on Wednesday at US$4.165 per bushel.

Corn prices are expected to stay low as usage increases 18 percent to 14.7 billion bushels by the end of the next decade. CBO expects production to surge 23 percent to 14.7 billion bushels, as a 15-percent growth in yield absorbs rising corn export demand and as a source of ethanol.

Soy and wheat prices paid to farmers will also stagnate, as they are expected to decline from this year's levels, said the CBO.

Soy will average US$9 this year, then fall to US$8.44 in 2012-13 before rising to US$9.04 in 2015-16, said CBO.

The agency said soy acreage, which jumped 17 percent to 75.9 million acres this year, will range between 73.6-75.1 million acres over the next 10 years.

Average wheat price is projected to fall to US$5.60 next year, and will not exceed that price for the next decade, said CBO. Wheat production in the next decade will range between 2.205 billion bushels and 2.295 billion bushels, down from this year's projection of 2.5 billion bushels, as yields will increase only 2.4 percent.