Jan. 7 (Bloomberg) -- Corn prices that reached a record $7.9925 a bushel last year are headed for a decade-long slump below $4 as production in the U.S., the world’s top grower, catches up with demand, according to congressional analysts.

The average cash price will bottom out at $3.65 in the 2012-2013 marketing year, then rise no higher than $3.94 through 2019, the analysts from the Congressional Budget Office said in a document used as part of a government-wide estimate of federal spending over the next decade. Corn futures closed today at $4.165 a bushel on the Chicago Board of Trade.

Wheat and soybean prices paid to farmers will also stagnate, according to the nonpartisan CBO. The average cotton price will rise from 40 cents a pound this year to more than 60 cents by 2011, the CBO said. The report doesn’t estimate high or low prices for the year, only averages.

Corn prices are expected to stay low even as total use rises 18 percent to 14.719 billion bushels by the end of the next decade. The analysts forecast production jumping 23 percent to 14.738 billion bushels, as a 15 percent gain in yields absorbs rising demand for the grain for exports and as a source of ethanol. Corn is the biggest U.S. crop, valued at a $52.1 billion in 2007.

Soybeans, Wheat

Soybean and wheat prices, which also rose to records in 2008, are expected to decline from this year’s levels.

Soybeans, the second-most-valuable U.S. crop, will average $9 a bushel this year, then fall as low as $8.44 in 2012-2013 before rising to a new peak of $9.04 in 2015-2016. Acreage, which jumped 17 percent to 75.9 million acres this year, will range between 73.6 and 75.1 million acres over the next 10 years, the CBO analysts said. The 2007 soybean crop was valued at $26.8 billion.

The average wheat price is forecast to tumble to $5.60 next year from $6.70 during the marketing year that ends May 31, and never rise above that price over the next decade. Production, seen at 2.5 billion bushels this year, will range between 2.205 billion bushels and 2.295 billion bushels as yields rise only 2.4 percent. Wheat is the fourth-most-valuable U.S. crop, with a 2007 value of $13.7 billion, also a record, following hay at $17 billion.

Cotton

Upland cotton prices are projected to rise as export demand lowers inventories from 7.1 million bales this July 31 to 4.1 million bales at the same time in 2012. The USDA valued the 2007 cotton crop at $5.2 billion.

The estimates, which include forecasts for crops that receive government subsidies, are separate from the U.S. Department of Agriculture’s annual 10-year baseline forecast for farm production and prices. That report, scheduled for release Feb. 12, is used to formulate the White House budget proposal.

Crop subsidies will average about $7.9 billion annually through 2019, according to the document, a copy of which was obtained by Bloomberg News.

The average prices cited are based on marketing years. For corn and soybeans, the year begins Sept. 1; wheat’s year starts on June 1 and cotton’s begins on Aug. 1.

To contact the reporter on this story: Alan Bjerga in Washington at abjerga@bloomberg.net.

Last Updated: January 7, 2009 19:31 EST