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…

Corn is the problem. The June floods in Iowa wiped out 2% of the U.S. corn crop, and corn prices spiked to more than $8 a bushel – four times the average corn price of the last 30 years. With corn at $8, it costs $150 to fatten a hog. But the meatpackers only pay $100 per hog. So the finishing farms lose $50 on every pig they raise.

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Right now, finishing farms are liquidating their herds and going out of business.

So farmers are getting stuck with piglets. When I went to Iowa a few weeks ago, I heard of farmers throwing piglets in the trash… or using them as compost. For the first time in his life, the farmer doesn’t have enough money to make his interest payments.

So the farmer contacted his lender and explained the situation. The loan officer advised him to sell all his land, liquidate the sows, and look for a job.

But Tom says this is a short-term trend. Once a shortage of hogs begins, the price of pork will follow corn to record highs. And this is when investors stand to make a big profit…

When corn goes to record highs, pork must also go to record highs. That’s because pork is corn refined. You could say a pig is just a sack of corn with four legs.

But there’s a lag. Right now, everyone’s selling hogs. The finishing operations are selling their herds, and the farrowing operations are dumping their sows. It is pushing down live hog prices.

But in nine months – when the market has worked through the excess – hogs will be in short supply. And that’s when hog prices will start setting records. This shortage will last for two years, because that’s how long it takes to bring a commercial hog operation from scratch to production.

In 1998, the last time the hog business washed out like this, live hog futures jumped from 10¢ to 70¢ in two years. I expect we’ll see something similar this time around…

The hog ETF is the easiest way to invest in hogs. It trades in London. The symbol in Yahoo Finance is HOGS.L. Experienced traders should look at the futures market. A lean hog contract trades in Chicago on the CME.