Don't look for cheaper food yet, even as grain prices drop
"Right now we're in a situation of a generally good and favourable outlook for 13/14 for nearly all the crops, but it all depends on the next few months' growing conditions and nobody today can predict what those will be," he added.
"We're not out of the woods yet."
A steep decline in nearby grain futures, compared to deferred contract months that represent the crops that will be harvested in the autumn, reflects USDA's larger-than-expected stocks estimate and lingering uncertainty over the size of the upcoming U.S. harvests.
Front-month July corn has tumbled almost 14 percent since the USDA issued its report, compared to a roughly 6 percent drop for December corn.
Meat and Bread
Wariness on the final outcome for crops cannot be ignored, given the drama of recent years and resulting food emergencies.
Early predictions for a record-breaking 2012 U.S. corn crop proved wrong after the worst drought in more than half a century drove yields to a 17-year low, while the Black Sea breadbasket saw poor weather slash its collective wheat crop by more than one-third.
A resulting surge in food prices last year revived memories of the 2007/08 food crisis, which the UN estimated added 75 million to the number of chronically hungry people in the world.
If the United States produces a large corn crop in 2013, sending grain prices lower, it will take two years before cheaper feed prices impact beef prices, Meyer said. The lag is the time needed to produce a new cow for slaughter.
Chicken prices could weaken in late 2013 and pork prices could drop in 2014 due to shorter turnaround times, he said.
"Until we see that this crop has been made, I don't think you're going to see a response from the protein sectors," Meyer said.
Goods like bread and breakfast cereal won't cheapen much either, said Bill Tierney, chief economist for AgResource Co and a former principal grains economist for USDA. The cost of corn and wheat is "inconsequential" in many bakery products, overshadowed by packaging, transportation and marketing costs, he said.
"The cost of a plastic wrapper is more than the cost of wheat that goes into a loaf of bread," he said.
U.S. shoppers paid about 2 percent more for a basket of food at grocery stores in the first quarter of 2013 than they did in the last quarter of 2012, according to a study issued last week by the American Farm Bureau Federation.
Food prices will likely rise by 3 percent to 4 percent during 2013 because of tight meat supplies, slightly exceeding the average rate of inflation over the past decade, said John Anderson, the Farm Bureau's deputy chief economist.
A drop of $1 in the corn market "is probably not even going to be a blip at the retail level," he said.
"Right now we're focused on planting, and we're having a late spring," Anderson said, referring to concerns about cold weather slowing the start of U.S. planting.
"There are million things that can happen between now and when we know what the size of this crop will be."