U.S. farmers will plant huge amounts corn and soybeans this year, producing a record corn crop and ending three years of razor-thin supplies barring weather problems, the U.S. Congressional Budget Office projected on Tuesday.
The CBO projected a corn crop of 14.454 billion bushels, which would be the biggest ever, and a soybean crop of 3.306 billion bushels, the third-largest on record.
The projections assume a return to normal weather and higher yields despite the lingering effects of the 2012 drought - the worst in 56 years.
Growers, meanwhile, will collect a record $16 billion in crop insurance indemnities for 2012 losses, CBO estimated in documents that forecast spending by the Agriculture Department and the rest of the federal government.
Crop insurers would lose $5 billion on their 2012 policies, the first money-losing year in a decade.
U.S. corn and soybean production has fallen for three years in a row, mostly because of poor weather, while heavy demand propelled commodity prices to record highs.
Growers were expected to respond to the continued high prices by planting 97 million acres of corn and 77 million acres of soybeans, similar to last spring.
Wheat sowings would drop slightly from 2012, the CBO said, while cotton plantings would shrink to the smallest in four years, reflecting current weak prices.
CROP INSURANCE IS BIGGEST STRAND IN SAFETY NET
A 14-billion-bushel U.S. corn crop would rise by about one-third from last year and would help rebuild U.S. stockpiles while promoting large increases in livestock feeding, exports and industrial use, including the production of ethanol.
Next week, the Agriculture Department will release its first projections for this year's U.S. crops.
The USDA's initial forecasts will be based on conditions in late 2012 and will be updated in late February. The first survey-based estimates of plantings will be issued by the agency at the end of March.
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