Last spring — as Americans suffered the ongoing housing crisis and credit crunch — a new and unexpected worry popped up: the threat to corn. In April, cool weather swept the Midwest corn fields. That gave way to downpours in May and June, causing widespread flooding on farms. Suddenly, talk of food shortages and doomed farmers permeated the news. The price of corn shot up, hitting a record high of $7.99 a bushel on June 27. Small ethanol-producers talked about closing up shop and grocers predicted a spike in the price of meat and other goods that depend on the corn crop.

 
But, the tables turned in August: after the floods receded and farmers re-seeded, Mother Nature played nice. The weather was so perfect, that the 2008 corn crop is now predicted to be the second biggest ever! The United States Department of Agriculture forecasts production of 12.3 billion bushels of corn this year — an increase of 600 million bushels from what the USDA was predicting earlier this summer. The bumper crop should go a long way to meeting America’s food and fuel needs this year.

Right now, corn futures are settling just under the $6 mark per bushel at commodity exchange markets. That’s still relatively high, but down $2 from the record just two months back. Still, those higher corn prices are having ripple effects across the board. Here are a couple of kernels to chomp on:

1) Record corn prices are pushing farmers to ditch other crops. This may manifest itself in higher food prices for other goods. For example, USA Today reports Mexican farmers are switching from cultivating blue agave plants — the raw ingredient in tequila — to growing corn for its high profits.

2) Interest in corn crop “left-overs” is growing. Deere & Co., Archer Daniels Midland and Monsanto — three giants of U.S. agribusiness — are funding research for the uses of corn byproducts, like all those stalks, leaves and cobs that we typically discarded. They’re researching ways to use so-called “corn stover” to generate steam and electricity, and of course, animal feedstock. This could leave us with more corn grain to eat, and make the crop even more valuable for farmers.

Any threat to corn crops can send prices soaring at the supermarket — ncluding the price of everything from bread to milk, cheese and meat — as well as prices at the pump, as more gas stations mix corn-based ethanol into gasoline. So, now that prices seem to be settling down a bit, it may be a good time to relax, put your feet up, and nab one last corn-on-the-cob before summer’s over. But, if you intend to wash that down with a shot of tequila, it’ll cost you!