Corn prices surge on news of shrinking supply

Corn prices surged 5 percent Thursday after the U.S. Agriculture Department said the nation's corn supply is shrinking. A short harvest last year left the nation with unusually small stockpiles of the grain -- 15 percent less than last year.

Northstar Commodity market advisor Christian Mayer says the corn market is poised to move even higher. He says demand for corn is strong from the livestock and ethanol industries.

"We started seeing the really tight numbers in November. And they just keep getting tighter and tighter as the month goes on," he said. "Because of all that demand coming at us, we're chewing through the corn faster than we ever really have."

The higher prices will encourage farmers to plant more corn this year, according to the USDA. Nationwide, farmers will boost corn plantings 5 percent over last year. In Minnesota, farmers will increase corn acres 3 percent, to nearly 8 million acres. State farmers will also plant 2 percent more wheat, but soybean acres will hold steady.

The run-up in grain prices is helping to push food costs higher. The federal government estimates those prices could rise 4 percent this year.

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