Huge U.S. corn and soybean plantings this spring will likely fail to refill razor-thin stocks enough to quell the surge in grain prices, the U.S. Agriculture Department said on Thursday.

In updated forecasts for the world's biggest crop exporter, the USDA warned that it could take several years to restore inventories to comfortable levels. It mostly maintained earlier forecasts on how many acres farmers would sow this spring, but said stocks at the end of the 2012 season would remain tight.

The U.S. government's forecasts are likely to fuel more concern globally that high prices could persist far longer than they did in 2008 when they hit record highs, as supplies remain too thin to cope with any further weather disasters.

While it is often said the cure for high prices is high prices, even with additional supplies expected this year, it is likely that the tight stocks-to-use situation will not be entirely mitigated over the course of one or even two growing seasons, USDA Chief Economist Joseph Glauber told the department's annual outlook conference on Thursday.

The planting forecasts were unchanged from the department's projections made earlier this month, when it projected 92 million acres of corn -- the second largest since 1944 -- and 78 million acres of soybeans, a record amount. Analysts had expected the agency to trim both forecasts marginally.

LITTLE CUSHION IN US END STOCKS

The greater surprise was in projections for tight ending stockpiles for 2011/12. While both corn and soybean ending stocks will be higher than this year's levels -- with corn forecast to be the smallest since 1996 and soybeans amounting to a few week's supply -- they suggest very little cushion for unexpected shortfalls.

It should be bullish all around even though the USDA stuck to their higher estimates than I probably would have done, said Jack Scoville, analyst for Price Futures Group.

It seems to me they're implying some very strong demand here because the ending stocks estimates remain pretty tight, really across the board, he added.

USDA said 2012 corn ending stocks would rise by 28 percent to a still-thin 865 million bushels, and soybeans stocks by 14 percent to 160 million bushels.

But USDA cut its outlook from a forecast made earlier this month for corn stocks by 23 percent and soybeans by 16 percent for 2012.

Contributing to the slim stocks will be soaring exports, which are expected to rise $9 billion this year to a record $135.5 billion.

Today there are 7 billion mouths to feed and many of them depend on American agriculture, Debbie Stabenow, chairman of the Senate Agriculture Committee, told the USDA's annual outlook conference.

China will become America's top export market, surpassing Canada. China is seen importing 60 percent of the world's soybeans and 40 percent of its cotton this year.

While the tight stocks figures were bullish, grain futures at the Chicago Board of Trade fell on Thursday as investors continued to liquidate positions and seek safer havens on concerns over the turmoil in the Middle East. Wheat fell 2 percent, corn nearly 1 percent while soybeans were only slightly lower.

CORN FOR ETHANOL AT RECORD HIGH

Ethanol makers are expected to consume a record 5 billion bushels of corn this year, or some 36 percent of the harvest.

Despite criticism that using food for fuel was driving up prices and contributing to thin stockpiles, Agriculture Secretary Tom Vilsack told the conference the government had no intention of scaling back on ethanol.

There is no reason for us to take the foot off the gas, Vilsack told the conference. This is a great opportunity for us because we can do it all, make no mistake about it.

Tight global commodity stockpiles have pushed food prices higher, contributing to political unrest in countries with high poverty rates and unemployment.

Former U.S. President Bill Clinton struck a more cautionary tone on ethanol. We have to become energy independent but we don't want to do it at the expense of food riots, Clinton said in the keynote address.

In the United States, food prices are forecast to rise a sharp 3.5 percent this year -- nearly double the overall inflation rate.

We're keeping an eye on this but I would suggest that as a result of what we went through in 2007 and 2008 we are better prepared to respond as a country and as a globe, Vilsack said.

But some analysts caution a bad crop in the United States would change everything.

There are speculators involved... but we've had the perfect storm over the last two years, and if we don't have a great crop this year in the United States, we are going to have an even bigger storm. said Pete Nessler, president of the brokerage FCStone LLC.

(Additional reporting by Michael Hirtzer; Graphics by Emily Stephenson; Writing Russell Blinch; Editing by Lisa Shumaker)

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