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U.S. farmers delivered a bumper crop last year, according to a government report released Monday that eased fears of a looming food shortage but caused commodity prices to drop.

Corn futures dropped 60 cents, or 7 percent, to close at $3.81 a bushel on the Chicago Board of Trade after the report was released. Soybeans also fell 7 percent, losing 70 cents to close at $9.66 a bushel.

Midwestern farmers delivered the second-largest corn crop in U.S. history in spite of massive flooding that ripped through Iowa, Missouri and elsewhere last summer. There were 12.1 billion bushels of corn grown for use as grain, down 7 percent from 2007's all-time record of 13.04 billion bushels, according to the U.S. Department of Agriculture's National Agricultural Statistics Service.

The soybean crop of 2.96 billion bushels was the fourth-largest in U.S. history, up 11 percent from 2007.

News of the bounty came just six months after global commodity traders pushed crop prices to all-time highs on fears that growing demand for grain- and crop-based fuels such as ethanol would strain global food supplies.

Monday's report showed that while U.S. supplies will remain strong, global demand has weakened considerably, said Scott Irwin, chairman of the agricultural marketing department at the University of Illinois at Urbana-Champaign.

Irwin said economists and traders have been caught off-guard by the rapid drop in demand.

"That's what the market is reacting to — more recessionary effects," Irwin said.

Ethanol industry groups were quick to cite the report as evidence that farmers can grow enough food to support demand for both food and fuel.

Any drop in crop prices is good news for meat and livestock companies such as Tyson Foods Inc., Pilgrim's Pride Corp. and Smithfield Foods Inc. Those companies have been battered over the last 12 months as feed costs have risen while meat prices stagnated. Pilgrim's Pride filed for bankruptcy protection last year.

For farmers, the plunge in prices is discouraging. The cost of key inputs such as fertilizer remains high, while it's unclear how low crop prices might ultimately fall.