The U.S. government Thursday unexpectedly raised its forecast for near-term corn supplies and projected an even bigger record corn harvest this fall.  The bottom line for consumers may well be lower food prices.

Agriculture.com noted that analysts for months have been worried about tight current corn supplies. Spot markets for physical delivery of the grain have been very strong, suggesting low availability. Recent Chinese purchases have heightened those concerns, and many analysts were waiting to see if the USDA would raise its corn export forecast — which it didn't.

The Des Moines Register pointed out that the new corn forecast, applied to expected Iowa production of 2.5 billion bushels or better, would shave up to $5 billion in cash from expected sales of the new crop now being planted:

However, the figure is not likely to be that large because many farmers have already presold some of this year’s crop on the futures board at higher prices, or invested in hedging their production.

The news would not be entirely negative for Iowa. Livestock feeders would enjoy lower feed costs and the state’s 41 ethanol plants, which are battling negative margins after the removal of the 45-cents per gallon tax credit at the end of last year, would see some relief on their costs.

Consumers could see a halt to a rise in food prices, which went up almost 10 percent last year and as much as 20 percent for some cuts of beef as well as bacon. Already wholesale beef and cattle prices have begun to drop in the last month.

But Iowa farmers accustomed to the head atmosphere for $6-$7 corn probably will have to adjust to prices that could be $2 per bushel or more lower.

“Farmers who haven’t hedged this year’s crop will be in trouble,” said Sal Gilbertie, who manages Teucrium Trading, an exchange fund for corn and soybeans traded on the New York Stock Exchange.

In its report Thursday, the USDA also raised its estimate by 12 percent for all-wheat production to the highest level since the 2008-2009 season. Wheat supplies have been ample after robust harvests in other countries pushed up global supplies, the Associated Press reported.

Soybean production was forecast at 3.205 billion bushels, up from the 2011 year with higher yields more than offsetting lower harvested acres.