The continuing surge in the price of corn, which is punishing households with higher food prices, is cutting the profits of American ethanol producers and playing havoc with an industry that was blamed for causing the grain shortage.

The price of a bushel of corn soared above $6 on the Chicago Mercantile Exchange last week, pushed higher by news that American farmers were planting less corn.

Farmers planted a record 94 million acres of corn last year but the US Department of Agriculture forecasts only 86 million acres this year as farmers switch from corn to soya bean, another crop that is generating record profits.

Expensive corn is hurting the livestock industry, which in turn will raise the price of meat, Rich Feltes, senior vice-president of commodity research for MF Global, said. “Hog producers are liquidating sows, the farmers are operating in the red,” he said.

The skyrocketing cost of corn is rebounding on the ethanol industry, which is taking an ever larger proportion of the US corn harvest to manufacture road fuel.

Last week Renova, an AIM-listed ethanol manufacturer, confirmed that it was struggling to secure finance for a 21 million-gallon plant in Idaho, and last month Pacific Ethanol, a Californian producer, disclosed big quarterly losses, cost overruns and bank loan defaults as the cost of corn hit its margins.

“Financial markets have been spooked [by the present price of corn],” Christopher Thomas, the chairman of Renova, said. “Two years ago the cost of corn was $2 a bushel; now it has reached $6. As the feedstock goes up, your margin is squeezed.”

Mr Feltes said that ethanol had turned an agricultural commodity into a fuel. “It's all about the shortage of land created by a rapid ramp-up of ethanol,” he said.

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