U.S. reserves of corn have hit their lowest level in more than 15 years, reflecting tighter supplies that will lead to higher food prices in 2011. Increasing demand for corn from the ethanol industry is a major reason for the decline.

The U.S. Department of Agriculture reported Wednesday that the ethanol industry's projected orders this year rose 8.4 percent, to 13.01 billion bushels, after record-high production in December and January. That means the United States will have about 675 million bushels of corn left over in late August when this year's harvest begins. That's roughly 5 percent of all corn that will be consumed, the lowest surplus level since 1996.

The decline in reserves caused corn futures to surge, with prices rising 2.4 percent to $6.9025 during morning trading. Corn prices have already doubled in the last six months, rising from $3.50 a bushel to nearly $7 a bushel. Analysts expect the price increases to continue in coming months.

"I think we have a chance to test the all-time high" price of $7.65 a bushel, said Telvent DTN analyst John Sanow. The tight level of reserves leaves little margin for error if there are production problems this year, which could send prices higher quickly, he said.

Major food makers and some restaurants have already said they'll be raising prices this year because they're paying more for corn, wheat, sugar, coffee and chocolate, all of which are at historically high prices. Weather has affected many crops this year.

It's not just playing out in the grocery store. McDonald's Corp. said last month that it may raise prices this year as its own food tab rises. The company already raised prices in some markets, including the United Kingdom.