As farmers confront mounting costs and riots erupt from Haiti to Egypt over food, Garry Niemeyer is paying the price for Wall Street’s speculation in grain markets.

Commodity-index funds control a record 4.51 billion bushels of corn, wheat, and soybeans through Chicago Board of Trade futures, equal to half the amount held in U.S. silos on March 1. The holdings jumped 29% in the past year as investors bought grain contracts seeking better returns than stocks or bonds. The buying sent crop prices and volatility to records and boosted the cost for growers and processors to manage risk.

Mr. Niemeyer, who farms 2,200 acres in Auburn, Ill., won’t use futures to protect the value of the crop he will harvest in October. With corn at $5.9075 a bushel, up from $3.88 last year, he says the contracts are too costly and risky. Investors want corn so much that last month they paid 55 cents a bushel more than grain handlers, the biggest premium since 1999.

“It’s the best of times for somebody speculating on grain prices, but it’s not the best of times for farmers,” Mr. Niemeyer, 59 said. “The demand for futures exceeds the demand for cash grains.”

Commodity investors control more American crops than ever before, competing with governments and consumers for dwindling food supplies. Demand is rising with population and income gains in Asia, while record energy costs boost biofuels consumption, sending grain inventories to the lowest levels in two decades.

Index-fund investment in CBOT corn, soybeans, and wheat has increased 66% to the equivalent of 902,105 futures contracts, a record, since January 2006, when the government began collecting the data. Each contract represents 5,000 bushels, about what Mr. Niemeyer reaps from every 22 acres of corn planted.

Investments in grain and livestock futures have more than doubled to about $65 billion from $25 billion in November, according to consultant AgResource Co. in Chicago. The buying of crop futures alone is about half the combined value of the corn, soybeans, and wheat grown in America, the world’s largest exporter of all three commodities. The U.S. Department of Agriculture valued the 2007 harvest at a record $92.5 billion.

Commodities are in their seventh year of gains, with oil rising to a record $119.90 a barrel on April 22. Copper and gold reached their highest prices ever this year, and rice has more than doubled in the past year to $24.18 per 100 pounds.

Crops and raw materials have “become an asset class that institutions use to an increasing extent,” billionaire George Soros said April 17. “On top of that, you have specific factors that create the relative shortage of oil and, now, also food.”

Surging food costs have sparked protests and riots in countries including Haiti, Indonesia, Mexico, and Egypt. Rice, corn, soybean, and wheat prices have climbed to records this year, partly because of droughts in Australia, a freeze in Kansas, and increased demand for livestock feed.

The divergence between CBOT futures and the underlying commodity is so great that some grain merchants have stopped bidding for new crops, Mr. Niemeyer said, a member of the National Corn Growers Association board. Others won’t guarantee a price for more than 60 days.

“We have a fundamental problem with the markets,” the president of researcher Cash Grain Bids Inc. in Bozeman, Mo., and a former Montana State University economist, Kevin McNew, said. “It is very difficult to operate a grain business when the cash prices are below the futures” by such a wide margin, he said.