Corn supplies expected to be tight in 2010

It's been a tough year for food producers, as rising prices on commodities including wheat, meat and coffee have forced many retailers to raise prices. Now, extreme weather in the American Midwest has caused another major food product to skyrocket in price: corn.

Corn is a critical component of the global food supply chain, found in everything from cereal to beef (as cow feed) to soft drinks (in its sugar-substitute form, high fructose corn syrup). The United States Department of Agriculture predicts that this year's corn harvest will be 3 percent smaller than 2009's, which set a new high record. The USDA report sparked a surge in speculative prices for the grain - and as corn prices soar, prices of nearly everything else on grocery store shelves could be affected.

"We can live with high commodity prices for a period without seeing much impact at the retail level, but if that persists for several months or a couple of years, then it eventually has to get passed on" to consumers, Darrel Good, an emeritus professor of agricultural economics at the University of Illinois, told the New York Times.

According to the paper, the 2010 crop could still be the third-largest in history, but because corn is so widely used - in animal feed, in ethanol, in a number of food additives and as a global export - supplies are still expected to be tight.