ST. LOUIS (AP)—U.S. farmers delivered a bumper crop in 2008, according to a government report released last week that eased fears of a looming food shortage but caused commodity prices to drop.

Corn futures dropped 60 cents, or 7 percent, to close at $3.81 a bushel on the Chicago Board of Trade after the report was released last week. Soybeans also fell 7 percent, losing 70 cents to close at $9.66 a bushel.

Midwestern farmers delivered the second-largest corn crop in U.S. history in spite of massive flooding that ripped through Iowa, Missouri and elsewhere this summer. There were 12.1 billion bushels of corn grown for use as grain, down 7 percent from 2007's all-time record of 13.04 billion bushels, according to the U.S. Department of Agriculture's National Agricultural Statistics Service.

The soybean crop of 2.96 billion bushels was the fourth largest in U.S. history, up 11 percent from 2007.

News of the bounty came just six months after global commodity traders pushed crop prices to all-time highs on fears that growing demand for grain and crop-based fuels like ethanol would strain global food supplies.

The report showed that while U.S. supplies will remain strong, global demand has weakened considerably, said Scott Irwin, chair of the agricultural marketing department at the University of Illinois at Urbana-Champaign.

Irwin said economists and traders have been caught off guard by the rapid drop in demand.

``That's what the market is reacting to—more recessionary effects,'' Irwin said.

Ethanol industry groups were quick to cite the report as evidence that farmers can grow enough food to support demand for both food and fuel.

``With an expected surplus of nearly 2 billion bushels at the end of this marketing year, it is clear that farmers can supply ample feedstock for food, feed, fiber and renewable fuel production,'' Renewable Fuels Association President Bob Dinneen said in a statement.

Any drop in crop prices is good news for meat and livestock companies like Tyson Foods Inc., Pilgrim's Pride Corp. and Smithfield Foods Inc. Those companies have been battered over the last 12 months as feed costs have risen, while meat prices stagnated. Pilgrim's Pride filed for bankruptcy protection last year, while Tyson Foods had to put most of its assets up as collateral to secure terms on its debt.

Food makers like ConAgra Foods Inc. and General Mills Inc. also should see an easing in their ingredient costs. Both companies have raised product prices but are facing resistance from grocers and retailers who want better bargains to lure anxious customers.

Corn prices hit almost $8 a bushel this summer after the heavy flooding wiped out crops and raised worries that the ground would be too wet to grow a viable harvest. But since then, the USDA said ideal weather helped push up yields. Plunging fuel prices also have battered upstart ethanol companies and reduced their demand for corn.

For farmers, the plunge in prices is discouraging. The cost of key inputs like fertilizer remains high, while its unclear how low crop prices might ultimately fall.

``Farmers are looking at planting a crop for this coming year and the input prices are such that they pretty much dictate a loss at the current price level we have for corn,'' said Rodney Weinzierl, who grows corn and soybeans on 500 acres near Stanford, Ill., and is executive director of the Illinois Corn Growers Association.

``The world recession is beginning to catch up with us,'' he said.

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