London, June 30 - A rise in U.S. plantings of corn and soybeans may temper food price inflation with rates in the United States already slowing sharply from year-ago levels, the U.S. Department of Agriculture's chief economist said.
"We will see what yields look like have as we have a late developing crop...but compared to (corn) acreage coming in at 83 (million acres), I think it is looking a little better," Joseph Glauber told Reuters in an interview on Tuesday.
"I think it (food price inflation) is relatively calm right now," Glauber said on the sidelines of the World Agri Invest Congress, adding U.S. food price inflation was now below three percent compared with more than six percent at times in 2008.
U.S. farmers planted their second largest corn acreage since 1946, the USDA said on Tuesday, surprising traders who had expected the cold, wet spring would lead to more land being switched to shorter maturing crops.
Corn plantings rose 1 percent from last year to 87.035 million acres, the U.S. Agriculture Department said, up from earlier estimates of 84.986 million acres and above trade estimates that averaged 83.961 million acres.
As expected, U.S. farmers planted a record area to soybeans this spring.
Glauber said there remained concerns about tight stocks of old crop soybeans despite the rise in plantings.
"The fact is stocks are at very low levels for soybeans. It is hard to borrow from the future," he said.
USDA pegged June 1 soy stocks at 597 million bushels, down 12 percent from the same time last year but above average trade expectations of 585 million bushels.
CLIMATE CHANGE BILL
Glauber said payments related to more environmentally beneficial agricultural practices could help mitigate the impact of higher energy costs linked to a climate change bill which was approved by the U.S. House of Representatives last week.
"Looking over the next 10 years I see some small drop in farm income (from the bill) without considering the offset markets," he said, adding that 50 to 60 percent of the cost of producing corn was energy and related fertilisers.
The cost of nitrogen based fertilisers, which are used extensively on corn crops, are linked to the price of natural gas, a key input in the production process.
"In the long run I think there will be more efficient fertiliser applications and some switch to less energy intensive crops," he said.
The U.S. Senate is now considering the bill which would create a market of agricultural projects known as "offsets" that aim to cut emissions.
"The potential market for offsets is very positive for agriculture. A lot depends on how that is all worked out," Glauber said.
The projects could form a market worth billions of dollars per year in coming years. They include steps such as burning methane given off by pits of rotting animal waste and planting crops without tilling the soil to help bury carbon-rich organic material.
"The real issue is how fast they (offset markets) develop," Glauber said.