Inflation-watchers can breathe a little easier this month as US farmers reap one of the biggest harvests in memory. Soya prices, down 11 per cent since May, and corn prices, down by nearly a third, reflect expectations that a bumper crop will prevent a spike in food prices as the stimulus-sodden world economy lurches towards recovery.

Yet while the US’s spectacular growing season has left some agricultural commodity investors in the lurch, structural factors that favour higher prices for corn and soya over the longer term remain. The demand side of the story is familiar by now: Chinese consumers’ growing appetite for meat should spur demand for soya, a key ingredient in animal feed. US government mandates for ethanol production, meanwhile, should fuel demand for corn, with ethanol production expected to consume about two-fifths of the US corn crop by 2012.