How the highest corn prices in over a decade could hit American wallets hard

Corn futures reached a 13-year high of $684 in intraday trading Tuesday, just $5.50 shy of the all-time high. That’s an increase of nearly $1.40 per bushel from a month ago and nearly twice the price of a year ago. Just before the pandemic officially began, on March 2, 2020, the closing price was $375.50.

The spike in the contract comes as traders worry about the national supply after a brutal winter in the Upper Midwest, as well as continuing drought conditions.

While corn is a summer staple for people’s picnics and get-togethers, it’s a vital component of a number of other products, all of which could see their prices increase as futures soar.

For example, corn is a critical ingredient in many food products, including cereal, tortilla chips, and other snack foods, including (of course) popcorn. It’s used as a favored animal feed for cattle, swine, poultry, and fish—and higher feed costs could result in higher meat prices as well. Many makers of those products are already increasing prices in preparation for the shortage.

Corn is also the main source of ethanol fuel in the United States, where most gasoline sold contains 10% ethanol to help reduce air pollution. Gas prices in 2021 are up more than $1 per gallon compared to a year ago, according to AAA, climbing from $1.79 in 2020 to $2.89 now. And they’re expected to hit $3 per gallon soon as demand soars.

A corn shortage could hit the housing market nearly as much as the surge in lumber prices has, as it’s used in industrial products including wallboard, insulation, paints, linoleum, wallpaper, and adhesives. Other common products, including cosmetic powders, candles, dyes, and lubricants include it as well. (It’s also a key ingredient for the nation’s whisky makers.)

Year to date, corn has seen the second-largest price increase among commodities, with a 40.6% jump—a bigger jump than gas and crude oil. Only lean hogs have gone up more.