MELISSA BLOCK, host: These days, the demand for corn seems insatiable. The ethanol industry, livestock and export markets can't seem to get enough. When a recent USDA report predicted lower yields than previously expected, prices spiked even higher. And economists say demand will likely continue to exceed supply for some time.

As Harvest Public Media's Kathleen Masterson reports, all of this has some investors treating corn like the new gold.

KATHLEEN MASTERSON: On a recent sun-beaten afternoon, I'm traveling with two corn buyers from Heartland Co-op in Des Moines to Vernon Flinn's farm just outside of town. They're visiting to check the crop's progress. For a more accurate estimate, you need to check the corn away from the edge of the field. So we wrestle our way through the towering eight-foot corn stalks, shielding our faces to keep from being cut by the sharp leaves.

(SOUNDBITE OF RUSTLING LEAVES)

MASTERSON: Flinn twists off an ear of corn to examine how the heat has damaged it.

VERNON FLINN: That one there is kind of a nose back, probably due to dry weather or - this here's probably 16 rows around and it looks like probably four or five kernel rows right there and that row that's aborted or will not fill.

MASTERSON: Still, when they measure the ears and count kernels back at the pickup, Flinn estimates a pretty decent crop, about 170 bushels per acre, compared to 153 projected nationally.

Farmers planted far more acres of corn this year, so even though flooding and drought lowered yield per acre estimates, harvest time could still bring a good-sized haul.

But demand from the ethanol industry, livestock feed and export market continues to out-strip yield projections, says Iowa State University economist Chad Hart, and that sent grain prices soaring.

CHAD HART: When you look, last summer, we had corn prices, in some cases, down around $3.50 a bushel. Now, we're up in the 6 to $7 range, so we've seen nearly a doubling of prices, if you will, over that past 15 months.

MASTERSON: The USDA reports suggest that grain prices will stay elevated over the next year or so. Corn stockpiles are nearing a 15 year low and soybean stockpiles have been tight for at least four years.

And in the last few months, another player has taken a bite out of the US corn market.

HART: China's been a very early buyer of the corn crop we're growing now and so they've already, if you will, put in some advance purchases and that's been something that has got the market a little worked up right now.

MASTERSON: China bought some 21 million bushels from the US in July, its biggest purchase in 15 years.

Now, high grain prices are usually good news for farmers. They helped Vernon Flinn buy a new tractor, but today's even higher prices mean even higher stakes and Flinn says selling in this volatile market comes with risks.

FLINN: I mean, you're kind of scared to sell it for fear you're going to miss the rally and you're scared if you don't sell it, for fear we're going to say, oh, heck, we should have sold it all last time.

MASTERSON: Driving his truck over to the next cornfield, Flinn and corn buyers Nick Hyde and Ron Groskreutz discuss what every farm struggles with: enormous swings in the market.

FLINN: It was a lot more fun when corn when $3 and it would move. Maybe the limit was 10 cents and if it moved 10 cents in a day, you know, that was huge.

NICK HYDE: If it moved a nickel in a day, you were looking for a meteorite.

FLINN: And now, they're saying corn is average. This year is just right around 22 or 23 cents a day.

HYDE: From high to low.

FLINN: In a day, it'll move. Well, unheard of.

MASTERSON: And more traders are betting not just on gold and precious metals, but on agricultural commodities. They're speculating on corn prices for years to come. Money in corn futures is five times what it was in 2004, according to numbers from the Chicago Mercantile Exchange. That's nearly a $2 trillion market for corn alone.

Farmers and traders alike are getting pretty worked up over the possibility of $8 a bushel corn, but for consumers, this market frenzy translates into higher food prices. Grocery items that rely heavily on grains, like meat, butter and eggs are likely to keep going up and much of it traces back to corn, which may just be the emerging gold standard of agricultural commodities.

For NPR News, I'm Kathleen Masterson.

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