Oxford, UK, 5 January 2012: Reuters

Global corn and soybean stocks remain low, leaving both commodities vulnerable to the threat posed by the La Nina weather phenomenon to production in Argentina and southern Brazil, U.S. Department of Agriculture chief economist Joseph Glauber said on Wednesday.

"Stocks levels for both those commodities are still quite low. There is a lot of volatility because of that and I think that the markets are reflecting that uncertainty right now," he told Reuters in an interview.

Corn and soybean prices on the Chicago Board of Trade have been rising as a drought centred on Argentina and southern Brazil threatens to reduce yields, particularly of corn as the crop enters its critical pollination phase. Cropcast, a weather information service widely followed by grain traders for its global crop outlooks, on Tuesday reduced its forecasts for Argentine corn and soybean production and said further cuts may be coming.

Meteorologists have expressed concern that La Nina may also bring a drier weather pattern to the U.S. grain belt, threatening crops in the world's top corn producer.

"Right now we are not anticipating drought but a lot can happen between now and planting time and certainly a lot between now and harvest time," Glauber said on the sidelines of the annual Oxford Farming Conference. U.S. corn planting normally gathers pace around mid-April and runs until around mid-June.

Glauber also said U.S. government spending on agriculture was likely to be cut as the country faces a budget crisis. "I think most people are anticipating we will see some significant spending cuts," he said, adding the largest savings would come from USDA's farm commodity programmes which can provide price and income support for farmers.

"Things like research and development are coming under pressure but I do think the bulk of the savings will come from the commodity programmes," he said. Glauber said spending on USDA's social safety net programmes such as food stamps was likely to be largely preserved while its information gathering role was facing budget cuts.

AERIAL PHOTOGRAPHY

USDA has a large network of agricultural experts around the world who provide input for the department's widely followed global crop estimates. Glauber said the department was trying to achieve cost savings, noting it was "spending a lot of time working on aerial photography and satellite technology to get better  estimates for foreign production."

"There is no question that (spending cuts) is a concern. In my own view I think these are monies well spent. The last thing you want is information just in the hands of a few people."

Glauber also said genetically modified crops had an important role to play in satisfying future demand for food. GM crops are widely grown and consumed in the United States. Their adoption in the European Union has, however, been very slow as they have struggled to get regulatory approval with many consumers wary of the new technology.

Glauber said acceptance would increase when GM varieties are able to offer clear benefits for consumers. "As consumers see the benefit of these more enhanced varieties to meet nutritional deficiencies or other health attributes I think people will be much more interested and willing to purchase these commodities," he said.

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