For many farmers and food producers, the deluge that swept across Iowa farm fields two months ago has faded from memory like dust washed...

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MINNEAPOLIS — For many farmers and food producers, the deluge that swept across Iowa farm fields two months ago has faded from memory like dust washed away by a hard summer rain.

Indeed, thanks to near-ideal weather conditions in the Midwest, farmers are on pace to produce the second-largest corn crop and fourth-largest soybean crop in history, according to a government report released Tuesday.

That sent a collective sigh of relief across much of the nation’s food industry.

The disaster predicted by many — one marked by soaring grain prices, bankrupt livestock producers and skyrocketing grocery prices — has been averted.

While consumers will still see higher prices for everything from bread and cereal to eggs and turkey, the pain won’t be nearly as bad as previously thought, according to economists and agricultural analysts.

“We’re still going to see food price inflation, but it could have been much, much worse had we not had the almost perfect weather since the middle of June,” said Tom Elam, an economist with Farm Econ, an agricultural-consulting firm based in Indianapolis.

The August crop report is the most anticipated of the year because it is the first based on actual interviews with farmers and visits by U.S. Department of Agriculture officials to farm fields.

“The first few [crop reports] of the year are guesses,” said Martin Farrell, an independent commodities trader in Minneapolis. “This one gives you the first solid idea of what the crop really looks like.”

This year’s view from the fields: The corn crop will total 12.288 billion bushels, up from 11.715 billion projected a month ago and second only to last year’s record 13.1 billion-bushel harvest, the USDA said.

Corn yields improved 4.4 percent from July estimates, to 155 bushels per acre, the agency forecast.

That’s the biggest increase in yield in the department’s August report in 10 years, according to Joe Victor, vice president for marketing at Allendale, a commodities broker based in McHenry Ill.

Farmers are grateful.

“I’ve been farming for 33 years, and this was probably one of the hardest springs I’ve had putting a crop in,” said Larry Gleason, a 56-year-old grower of soybeans and beans on 3,500 central Illinois acres near Elkhart.

“I just planted it wet and hoped Mother Nature would keep sending the rain to get it up,” he said.

The rains came — enough to have Gleason casting his corn crops as “excellent right now.” His beans, despite being put in the ground weeks late, are progressing.

The strong numbers gave Wayne Kostroski, co-owner of Franklin Street Bakery in Minneapolis, hope that wheat prices may finally stabilize, if not fall a bit.

Kostroski’s bakery supplies hamburger buns, rolls, hoagies and other baked breads to restaurants in 20 states. Wheat makes up more than 30 percent of his ingredient costs.

Like many food producers, Franklin Street hedges against commodity price fluctuations by purchasing wheat months in advance.

By doing so, the company managed to avoid buying wheat when future prices peaked in June, at the height of the speculative fever in the grain markets.

Even so, elevated wheat and oil prices have forced Kostroski to cut operating costs and to let some vacant job positions go unfilled, he said.

“Fortunately, the worst appears to be over,” he said. “Now, we have the double benefit of not paying higher prices for flour and having a better, more efficient operation in place.”

But consumers likely will see little relief.

Though prices for grains have fallen dramatically since June, food and livestock producers are still paying roughly twice as much for corn as they did before the commodities-price rally began two years ago.

And these prices have not fully filtered through the nation’s food system, said Mitch Corwin, a senior analyst at Morningstar in Chicago.

Many supermarket and restaurant chains buy items like eggs, poultry and other staples on long-term contracts, which means that much of the price increases of the past 12 months won’t appear on grocery and restaurant bills until next year, he said.

“Companies are rolling off their hedges,” Corwin said. “Even if corn is cheaper today than it has been recently, it’s still very expensive by historic standards. … You can’t make an easy argument that, because corn is down $3, then food prices are coming down.”

Information from The Associated Press is included in this report