Bad weather, poor crop yields and greater global demand for food are putting upward pressure on commodities. In addition to rising prices, the demand has pushed commodity exchange traded funds (ETFs) to the top of the heap.

The U.S. Department of Agriculture projects that consumer food prices will increase an average of 0.5% to 1.5% for 2010, the smallest gain since 1992, writes Katie Walker for Daily American. Pennsylvania Farm Bureau spokesman Mark O’Neill remarked that the main driver behind food prices is higher energy costs due to the supply chain. Increased demand for corn may start to affect meat prices in the coming months, since many farmers rely on corn as an animal feed. [Commodity ETFs That Are Beating Gold.]

The USDA estimates beef and veal prices to increase 2.5% to 3.5% while pork prices may increase 2.5% to 4%. Dairy products could jump 4.5% to 5.5% and egg prices may rise 2.5% to 3.5%.

The recent rally in soft commodities and increased global demand for food have helped agriculture businesses, reports Scott Eden for PBS. So far, crop failures, especially in Russia, and the USDA’s reduced yield estimates helped push the rallies in commodity prices.

As China hoards its cotton supply for its textile mills, cotton futures gained on the decreased global supply outlook, reports Debarati Roy for Bloomberg. The bad weather in China has reduced cotton yields in China, which will force mills to import more cotton. Cotton prices have surged 79% so far this year. China accounts for 40% of global cotton output.

Additionally, hailstorms have damaged crops in Texas and a potential tropical cyclone may damage damage cotton crops in India, the world’s second-largest producer. [Crop Shortage a Boon for Agriculture ETFs.]

For more information on agriculture, visit our agriculture category.

As a result of soaring prices, the top six ETFs in the last month are all agriculture and soft commodities related. [Commodity ETFs That Are Beating Gold.]

  • iPath DJ-UBS Cotton TR Sub-Idx ETN (NYSEArca: BAL), up 41.1%
  • iPath DJ-UBS Sugar TR Sub-Idx ETN (NYSEArca: SGG), up 34%
  • iPath DJ-UBS Agriculture TR Sub-Idx ETN (NYSEArca: JJA ) up 20.3%
  • Teucrium Corn (NYSEArca: CORN) up 19.5%
  • iPath DJ-UBS Grains TR Sub-Idx ETN (NYSEArca: JJG) up 17.5%
  • ELEMENTS Rogers Intl Commodity Agri ETN (NYSEArca: RJA) up 16.9%

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.