Somewhere along the road, America forgot how to make things. Finance became our national product. But things are about to change, says Chris Mayer. As the global banking system cracks, investors will return to the simple, tangible things that we need. And this will create some stunning profit opportunities for those who move quickly.

Corn prices may have sold off in recent days, but they remain more than double the value of a year ago. This is having a dramatic impact in related industries. Corn is the staple diet of most farmed animals. And as their food bills climb, farmers are feeling the strain. Tom Dyson recently visited Iowa and says farmers there are throwing piglets in the trash — hogs there are no longer worth the feed costs…

Although meat-and-dairy prices are expected to zoom even higher from their current record levels, this slice of the commodities boom won’t be a slam-dunk profit play for investors: Many food producers are watching the revenue gains they’re reaping from the rising market prices get wiped by even bigger spikes in commodity-related expenses.

“We are in the early stages of what will become a big mess for producers” of food products, including meat-and-dairy offerings, Greg Wagner, a senior analyst at Ag Resource Co., told the Dow Jones News Service. Over the next few years, retail food prices “will rise like never before.”

Flooding in the Midwest and fears of crop damage caused corn prices to climb in Chicago for the eighth consecutive day — their biggest gain in 11 weeks. Prices are expected to hit $8 a bushel by next week.

“Corn is in trouble because of the wet spring that has drenched the midwest,” says Justice Litle in Taipan Daily.

Yesterday, the USDA said in a report that American corn output will be down significantly from last year’s estimate.

At a summit in Rome held by the UN’s Food and Agriculture Organization, UN Secretary General Ban Ki-moon said world food output needs to rise 50% by 2030 in order for the growing population to be fed.

“Soaring prices of grains, dairy and meat have been grabbing global headlines,” says Jennifer Yousfi in Money Morning, “but other commodities have been on the rise as well.

Wheat sank to its lowest price since August last year as US farmers began harvesting what is expected to be the biggest winter grain crop in a decade, reports Bloomberg:

Production will increase 17 percent from a year earlier to 1.78 billion bushels, the most since 1998, the U.S. Department of Agriculture forecasts. About 4 percent more acres were seeded from September to November, the agency said. Wheat prices have tumbled 45 percent from a record $13.495 a bushel on Feb. 27.

A perfect storm is gathering that may make investing in a livestock ETF one of the best profit plays for 2008.

According to a report by Bloomberg, cattle prices may rise 13% by the end of the year on the Chicago Mercantile Exchange and Brazil’s Bolsa de Mercadorias e Futuros. More from this story:

Not since 1996, when corn reached what was then a record $5 a bushel, have cattle been this cheap relative to their primary source of feed.

Agricultural commodities won’t drop back to pre-crisis levels for at least ten years, according to a report by the OECD and the UN. This from the Financial Times:

Food prices have undergone a paradigm shift and will not drop back to pre-crisis levels for at least the next 10 years, putting long-term pressure on governments facing the food crisis, according to a forthcoming report.

The time is right to invest in a livestock ETF. Livestock prices have remained cheap over because grain prices have remained low. But this has changed… and an ETF is a great way to play the upswing in livestock prices.

“Hogs, like most commodities, went nowhere for 30 years,” says Ian Davis in The Growth Stock Wire. “In 1977, hogs sold for about 55.5 cents per pound. Today hogs sell for only about 79 cents per pound. That’s a rise of 42% in 31 years, or an annualized return of 1.1%… well below the inflation rate.

Corn stocks are expected to plunge to a 13-year low, according to the US Department of Agriculture, setting up a great play in a little-known livestock ETF.

MarketWatch reports that corn stocks are set to suffer because US farmers are cutting back corn acreage this spring to grow more soybeans.

Corn futures for July delivery today closed down 1 cent at $6.2925 a bushel. The contract had ended Thursday’s session at $6.3025 a bushel, an all-time high.