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Impact of renewable fuels standard ethanol mandates on the corn market

Author

Listed:
  • John D. Anderson

    (Department of Agricultural Economics, P.O. Box 5187, Mississippi State University, MI 39762)

  • Keith H. Coble

    (Department of Agricultural Economics, Mississippi State University, MI 39762)

Abstract

Since 2002, the Renewable Fuels Standard has established mandated levels of ethanol blending in gasoline. Mandated ethanol use represents an important component of ethanol demand. Thus, the ethanol mandates influence derived demand for corn. This work investigates the potential impact of ethanol mandates on equilibrium corn prices and quantities, focusing on how the mandates influence market participant expectations. Results illustrate that due to the stochastic nature of supply and demand shocks, even a mandate that is technically nonbinding can have a substantial impact on corn prices and quantities through the mandate's impact on the price-responsiveness of demand from the ethanol sector. [JEL classifications: Q13, Q42, Q48]. © 2010 Wiley Periodicals, Inc.

Suggested Citation

  • John D. Anderson & Keith H. Coble, 2010. "Impact of renewable fuels standard ethanol mandates on the corn market," Agribusiness, John Wiley & Sons, Ltd., vol. 26(1), pages 49-63.
    • Handle: RePEc:wly:agribz:v:26:y:2010:i:1:p:49-63
    DOI: 10.1002/agr.20202
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    References listed on IDEAS

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    Cited by:

    1. Condon, Nicole & Klemick, Heather & Wolverton, Ann, 2015. "Impacts of ethanol policy on corn prices: A review and meta-analysis of recent evidence," Food Policy, Elsevier, vol. 51(C), pages 63-73.
    2. Shin, Jungwoo & Hwang, Won-Sik, 2017. "Consumer preference and willingness to pay for a renewable fuel standard (RFS) policy: Focusing on ex-ante market analysis and segmentation," Energy Policy, Elsevier, vol. 106(C), pages 32-40.
    3. Natanelov, Valeri & McKenzie, Andrew M. & Van Huylenbroeck, Guido, 2013. "Crude oil–corn–ethanol – nexus: A contextual approach," Energy Policy, Elsevier, vol. 63(C), pages 504-513.
    4. Samuel Gamtessa, 2022. "Capacity utilization, factor substitution, and productivity growth in Canadian food processing sector," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 10(1), pages 1-16, December.
    5. Tristan Skolrud & Gregmar Galinato & Suzette Galinato & Richard Shumway & Jonathan Yoder, 2014. "The Role of Market Structure and Federal Renewable Fuel Standards in the Growth of the Cellulosic Biofuel Sector," Working Papers 2014-02, School of Economic Sciences, Washington State University.
    6. Golecha, Rajdeep & Gan, Jianbang, 2016. "Effects of corn stover year-to-year supply variability and market structure on biomass utilization and cost," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 34-44.
    7. Hu, Kejia & Chen, Yuche, 2019. "Equilibrium fuel supply and carbon credit pricing under market competition and environmental regulations: A California case study," Applied Energy, Elsevier, vol. 236(C), pages 815-824.
    8. McPhail, Lihong Lu & Babcock, Bruce A., 2012. "Impact of US biofuel policy on US corn and gasoline price variability," Energy, Elsevier, vol. 37(1), pages 505-513.
    9. Wang, Xin & Lim, Michael K. & Ouyang, Yanfeng, 2017. "Food-energy-environment trilemma: Policy impacts on farmland use and biofuel industry development," Energy Economics, Elsevier, vol. 67(C), pages 35-48.
    10. Applanaidu, Shri Dewi & Ali, Anizah & Haji Alias, Mohammad, 2014. "Impact of Biodiesel Blend Mandate (B10) on the Malaysian Palm Oil Industry," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 48(2), pages 29-40.
    11. David Ubilava, 2012. "Modeling Nonlinearities in the U.S. Soybean‐to‐Corn Price Ratio: A Smooth Transition Autoregression Approach," Agribusiness, John Wiley & Sons, Ltd., vol. 28(1), pages 29-41, January.
    12. Wang, Xin & Lim, Michael K. & Ouyang, Yanfeng, 2015. "Infrastructure deployment under uncertainties and competition: The biofuel industry case," Transportation Research Part B: Methodological, Elsevier, vol. 78(C), pages 1-15.
    13. Zhu, Yichen & Ghoshray, Atanu, 2021. "Climate Anomalies and Its Impact on U.S. Corn and Soybean Prices," 2021 Conference, August 17-31, 2021, Virtual 315271, International Association of Agricultural Economists.
    14. Lewis, Karen E. & Tonsor, Glynn T., 2011. "The Impact of Ethanol Production on Spatial Grain Market Relationships," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 14(4), pages 1-14, November.
    15. Bai, Yun & Ouyang, Yanfeng & Pang, Jong-Shi, 2012. "Biofuel supply chain design under competitive agricultural land use and feedstock market equilibrium," Energy Economics, Elsevier, vol. 34(5), pages 1623-1633.
    16. Trumbo, Jennifer L. & Tonn, Bruce E., 2016. "Biofuels: A sustainable choice for the United States' energy future?," Technological Forecasting and Social Change, Elsevier, vol. 104(C), pages 147-161.

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    More about this item

    JEL classification:

    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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