U.S. grain prices should stay unrelentingly high this year, according to a Reuters poll, the latest sign that the era of cheap food has come to an end.

U.S. corn, soybeans and wheat prices -- which surged by as much has 50 percent last year and hit their highest levels since mid-2008 -- will dip by at most 5 percent by the end of 2011, according to the poll of 16 analysts.

The forecasts suggest no quick relief for nations bedeviled by record high food costs that have stoked civil unrest. It means any extreme weather event in a grains-producing part of the world could send prices soaring further.

The expectations may also strengthen importers' resolve to build bigger inventories after a year in which stocks of corn and soybeans in the United States -- the world's top exporter -- dwindled to their lowest level in decades.

In a sign of more consumer pain on the meat front, U.S. hog futures hit a record high on Friday as South Korea stepped up imports after culling its herd due to disease.

The U.N.'s Food and Agricultural Organization (FAO) pointed to sugar and meat as two primary commodities that helped to lift world food prices to a record high in December.

While grain prices remain below the historic highs of 2008, they could remain stronger for longer this year as intense competition among crops for land use and depleted grain bins make it an even greater challenge to restore equilibrium.

Even if we have a good year, we are not going to have the inventories we've seen before. I really do think the time of cheap food prices is over, and that's just it, said analyst Chris Mann of Traders Group Inc in Chicago.

Everything is set to the point where supply equals demand right now. But if you pull one thing out of it, or if you disrupt the equation in some little way or tweak it, I think, with inventories as tight as they are, it will really have an impact on prices. A drought, a flood, anything, said Mann.

A series of shocks brought the grains market to the brink last year.

A summer drought in Russia led to a suspension of grain exports, rains in Australia downgraded the quality of its wheat crop, and a lack of rain cut Argentine corn output. China bought near-record volumes of U.S. corn, and demand for corn-based ethanol surged.

Now prices must remain high to encourage U.S. farmers to plant more corn and soybeans in the spring, and traders will be on tenterhooks to see whether crops in the United States are enough to correct the deficit in inventories.

POLL POINTS TO HIGH PRICES

The average forecast of 16 grain analysts showed that Chicago Board of Trade corn futures will end this year at $5.96 per bushel down five percent from the end of 2010.

Corn futures posted the best gains among grains and oilseeds last year, surging 52 percent as U.S. stockpiles fell to the lowest in 15 years in the wake of strong demand from the ethanol industry and steady exports after the Russian drought.

Wheat futures were forecast at an average $7.93 per bushel, virtually unchanged from the end of 2010. Wheat futures surged 47 percent last year amid the crop damage.

Soybean futures were forecast at an average of $13.20 per bushel, down 5 percent from the 2010 close. Soybean futures rose 34 percent last year for its second annual increase.

Prices for corn and soybeans topped out at 2-1/2 year highs last week, while wheat hit a 29-month high on Thursday.

WORLD WANTS MORE GRAINS

Another year of high grain prices could exacerbate the problem of food price inflation.

Surging food prices have taken center stage with policy makers, especially in commodities-dependent China and India -- home to one-third of the world's population. Both countries have raised interest rates in a bid to rein in inflation.

Some analysts believe monetary tightening could reduce demand for commodities as the cost of capital rises, but others say importing countries, especially China and India, need to keep buying for consumption and reserves.

As food inflation becomes a bigger issue in the lesser-developed countries, the global pipeline for food commodities is expanding. The world wants to own a little more inventory, said grains analyst Terry Roggensack of The Hightower Report in Chicago.

For North African countries like Algeria, the rush to import grains, particularly in the past two weeks, has been fueled by concerns about how to reduce populist anger over rising food costs that has led to riots.

With the stepped-up demand from North Africa and the Middle East whittling away at global wheat stocks, there is no room for error with the winter wheat crop in the United States.

(Additional reporting by Julie Ingwersen, Michael Hirtzer and Mark Weinraub; Editing by David Gregorio and John Picinich)

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