U.S. Cuts Crop Forecasts Amid Drought --- Lush Harvests in Midwest Offset Shortfall in East, Depressing Grain Prices
The Agriculture Department cut its harvest forecasts to reflect the devastating drought in the Eastern U.S., but consumers won't see much impact in their food bills.</br></br>Lush conditions in the Midwest mean farmers in the major grain states probably will harvest large enough crops over the next several weeks to keep the nation awash in a price-depressing grain glut. The two-year-old glut, combined with weak exports, has tipped the farm economy into recession.</br></br>Several economists said they continue to expect U.S. grocery prices to climb only about a moderate 2% this year. Cheap prices of raw materials such as corn are helping food manufacturers offset their rising costs of energy and labor.</br></br>"There is still plenty of everything to go around," said John M. Schnittker, a farm economist in Washington.</br></br>Based on monthly field surveys, the USDA said it expects farmers to harvest 2.78 billion bushels of soybeans, down 3% from its August forecast but still 1% larger than last year's record harvest.