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Corn futures plungeCharlie Neibergall/The Associated Press

Corn futures have suffered their steepest fall in 15 years after record prices prompted U.S. farmers to defy wet spring weather to plant a sharply increased acreage of the grain.

The decline in the corn (maize) price - if it persists - could help support the Federal Reserve's view that the recently seen higher U.S. inflation could be transitory.

Lower food prices could also bode well for the U.S. economic outlook. In its June statement, the Federal Open Market Committee, which sets interest rates, cited "higher food prices" and their damping effect on consumer spending as one of the conditions restraining the economy.

Three weeks ago corn was less than a penny short of $8 (U.S.) per bushel, an all-time high, and analysts warned that prices would need to stay high to keep critically low stocks from running out before harvest time.

But the U.S. Department of Agriculture said on Thursday that farmers in fertile states such as Iowa, Minnesota and Nebraska had sown unexpectedly large amounts of corn. At 92.3 million acres, U.S. plantings were the second biggest since the Second World War and came in spite of soggy fields and damaging floods. The U.S. is the largest corn producer and exporter.

"Everything we'd been staring at said [farmers]just couldn't get out in the field," said Chad Hart, agricultural economist at Iowa State University. "Well, evidently they did."

High prices have also begun to cut into corn consumption as meat producers shift to other feeds. In the three months to June 1 implied demand fell 15.7 per cent from the same period last year.

Corn has led major food commodities higher, rising 77 per cent in the past year as demand from U.S., China and other big consumers threatened to run down supplies. It has contributed to rising meat prices, which in the U.S. are 8.5 per cent higher than a year ago.

In Chicago, corn for July delivery fell as much as 82¾ cents to $6.15¼ a bushel. The 11.9 per cent decline was the sharpest in percentage terms since 1996. Chicago wheat fell 9.5 per cent. The benchmark Reuters-Jefferies CRB commodity index, which was on track to end its worst quarter since 2008, declined 0.9 per cent.

"The report tells us that corn has topped. If there was a question before, I don't think there's any question now," said George Enloe, partner with Amarillo Brokerage in Texas.

Harry Bormann, grain team leader at MaxYield Cooperative in Iowa, said stalks in the state's largest corn-growing county were now chest high. After farmers finished a first round of planting, "they came in and ordered fertilizer for another field or two. We started to see a hint that there could be more corn acres," he said.

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