The US Dept of Agriculture’s Friday crop report has left traders carrying short positions in corn (NYSEARCA:CORN) with a decidedly sickening feeling in the pits of their stomachs. The federal agency warned that the summer’s blistering hot weather has shrunk yields from 165 bushels per acre down to 162.5. The crop in Illinois is looking very poor, and conditions overseas continue to deteriorate at a rapid rate. In the meantime, the ethanol industry continues to gobble up a larger share of the total harvest, now thought to be over 35% (click here for “The Future Looks Great for the Ethanol Boondoggle” ). Unless we get some decent rain soon, some bulls are talking about a revisit of the $7.55/bushel peak seen two years ago. All eyes are now on Iowa, which the USDA should cover in its next report. Farmers are celebrating, while the big food manufacturers are bracing themselves for further price hikes. Take a look at the charts of any food product these days, from cattle to sugar to wheat, and they all look great. Will inflation begin its long predicted comeback in the agricultural sector?