Despite planting record amounts of corn and soybeans this year, U.S. farmers are sitting on unexpectedly small stockpiles of both crops. Meanwhile, the demand for corn is crowding out use of land for other crops, including cotton.

The USDA reports underscored that U.S. farmers are reaching the limits of arable land in the world's biggest crop exporter … Spring wheat sowing, while among the biggest in decades, could yet shrink.

A Reuters analysis suggests that this year could see the largest corn harvest in U.S. history, and yet food prices are forecast to rise 3.5 percent, threatening unrest in countries already experiencing record high food prices.

"This turns us back to having to ration the corn," said Charlie Sernatinger, analyst at ABN Amro.

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The culprits for record-high food prices despite record harvests are high demand for ethanol, livestock feed, and "surprise buying" from China. Demand is so high this year that it will lead to "double cropping" — following wheat with soybeans, for example — and "bringing lower-quality land into production rather leave it fallow or in pasture."

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