The U.S. Department of Agriculture has increased its forecast for a surplus of corn, raising the prospect that prices could tumble to levels that would trigger subsidy payments to farmers, according to a recent Bloomberg report. Corn supplies in 2015 will reach 1.801 billion bushels, 4.3 percent larger than forecast last month, USDA said, even as it cut the estimate for the size of this year’s crop.
Futures sold in Chicago briefly fell under $3.83 a bushel, nearing the $3.70 support price contained in the farm bill that Congress passed this year. Payouts are based on a longer-term average, so a dip such as the recent one will not immediately add to taxpayer costs. Still, as U.S. grains such as corn and rice head toward bigger surpluses, an era of low crop subsidies may be ending.