UPDATE: Corn Shortfall Points to Higher Food Prices, and Ag Trades

You might call this the Green Acres play! Ag stocks were on fire Thursday after the latest crop report showed the wet spring will likely cut the corn harvest.

The United States corn surplus in 2012 is estimated to be just 695 million bushels, far less than the 900 million estimated last month. On the news corn futures climbed sharply.

What does that mean for investors?

More expensive corn will likely trigger food price increases this year. That could ultimately make everything from meat to cereal and soft drinks more expensive at the supermarket.

"Corn has 4500 different uses," says Rich Ilczyszyn, Link Waldock, Senior Market Strategist in a live interview on Fast Money.

For all 2011, the USDA predicts food prices will rise 3% to 4%.

What’s the trade?

Trader Zach Karabell says these developments are bullish for fertilizer makers such as CF Industries. “The world needs corn and the ground needs nitrogen to grow the corn,” he says. He’d also look at Monsanto or Dupont as a play on seeds. “Demand for food isn’t going anywhere and Mother Nature is creating supply constraints.”

Trader Brian Kelly is also bullish Monsanto and he's also a buyer of the DBA .

Steve Grasso's play is “short the cereal makers.”

Trader Stephen Weiss is cautious of the meat companies such as Smithfield and Tyson. “30% of these company's costs are related to feed – and that’s corn!”

Joe Terranova says look at Darling International . "In essence they make corn substitutes. They go into a restaurant and take used cookies and they turn it into bakery feed that's used as a corn substitute." He goes on to explain he sees a correlation between corn prices and this stock.

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Trader disclosure: On June 9, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Terranova ons (MCD); Terranova owns (DAR); Terranova owns (XOM); Terranova owns (KSS); Terranova owns (CVI); Terranova owns (OXY); Terranova owns (TM); Terranova owns (BJ); Terranova owns (DIS); Terranova owns (PFE); Terranova owns (V); Terranova owns (FLX); Terranova owns (JPM); Terranova owns (PEP); Terranova owns (VRTS); Terranova owns (HPQ); Terranova is short (DELL); Terranova is short (AND); Adami owns (AGU); Adami owns (C); Adami owns (INTC); Adami owns (GS); Adami owns (MSFT); Adami owns (NUE); Adami owns (BTU); Grasso owns (AKS); Grasso owns (AMD); Grasso owns (ASTM); Grasso owns (BA); Grasso owns (BAC); Grasso owns (C); Grasso owns (D); Grasso owns (HOV); Grasso owns (JPM); Grasso owns (LIT); Grasso owns (LPX); Grasso owns (MHY); Grasso owns (NDAQ); Grasso owns (PFE); Grasso owns (PRST); Karabell owns (AAPL); Karabell owns (GS); Karabell owns (GOOG); Karabell owns (RIMM); Weiss owns (UUP); Weiss owns (QCOM); Weiss owns (MSFT); Weiss owns (COP); Weiss owns (DVN); Weiss owns (HK); Weiss owns (EMC); Weiss owns (NS); Weiss owns (ETP); Weiss owns (MDRX); Weiss owns (TEVA); Weiss owns (BRCM); Weiss owns (KEY); Weiss owns (VZ); Weiss owns (MRK);

Brian Kelly
Accounts Managed by Brian Kelly Capital own (GLD)
Accounts Managed by Brian Kelly Capital own (SLV)
Accounts Managed by Brian Kelly Capital own (IWM) puts
Accounts Managed by Brian Kelly Capital own new zealand dollar
Accounts Managed by Brian Kelly Capital own swedisk krona
Accounts Managed by Brian Kelly Capital own canadian dollars

For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of (CCG)
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSWI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (IGE)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLY)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of DOMINO'S PIZZA UK & URL PLC
Virtus Investment Partners Owns More Than 1% Of (DRYS)

For Anthony Scaramucci
Skybridge is a Fund of Funds Manager
Funds Held May or May not Own the Recommended Securities

For Steve Grasso:
Stuart Frankel & Co and it’s partners own(CSCO)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HPQ)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (MU)
Stuart Frankel & Co and it’s partners own (MSFT)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own RDC
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners own UAL
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners are SHORTS (QQQQ)
Stuart Frankel & Co and it’s partners own (AAPL)
Stuart Frankel & Co and its partners Are Short (AAPL)

For Zachary Karabell
River Twice Capital is short (SPY)
River Twice Capital is short (CAT)

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