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The Effect of Ethanol Production on the U.S. National Corn Price

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  • Park, Hwanil
  • Fortenbery, T. Randall

Abstract

A system of equations representing corn supply, feed demand, export demand, food, alcohol and industrial (FAI) demand, and corn price is estimated by three-stage least squares. A price dependent reduced form equation is then formed to investigate the effect of ethanol production on the national average corn price. The elasticity of corn price with respect to ethanol production is then obtained. Results suggest that ethanol production has a positive impact on the national corn price and that the demand from FAI has a greater impact on the corn price than other demand categories. Thus, significant growth in ethanol production is important in explaining corn price determination.

Suggested Citation

  • Park, Hwanil & Fortenbery, T. Randall, 2007. "The Effect of Ethanol Production on the U.S. National Corn Price," 2007 Conference, April 16-17, 2007, Chicago, Illinois 37565, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
  • Handle: RePEc:ags:nccsci:37565
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    References listed on IDEAS

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    9. Taylor, Richard D. & Mattson, Jeremy W. & Andino, Jose & Koo, Won W., 2006. "Ethanol'S Impact On The U.S. Corn Industry," Agribusiness & Applied Economics Report 23512, North Dakota State University, Department of Agribusiness and Applied Economics.
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    Cited by:

    1. 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.
    2. Dae-Heum Kwon & Jungho Baek & Won W. Koo, 2012. "A New Look at the Emergence of an Agro-Energy Nexus: A Graphical Causal Approach," Business and Economic Research, Macrothink Institute, vol. 2(2), pages 42-53, December.
    3. Zheng, Hualu & Muhammad, Andrew & Herndon, Cary W., Jr., 2009. "The Impacts of Ethanol on the US Catfish Farm Sector," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia 46248, Southern Agricultural Economics Association.
    4. Seth Meyer, 2009. "Commentary," Regional Economic Development, Federal Reserve Bank of St. Louis, issue Apr, pages 74-77.
    5. Arnade, Carlos & Hoffman, Linwood, 2016. "Maize Price Relationships in a Changing International Market: Have Brazil and/or Ukraine Crossed a Threshold?," 2017 Allied Social Science Association (ASSA) Annual Meeting, January 6-8, 2017, Chicago, Illinois 250116, Agricultural and Applied Economics Association.
    6. Blanco, Luisa & Isenhouer, Michelle, 2010. "Powering America: The impact of ethanol production in the Corn Belt states," Energy Economics, Elsevier, vol. 32(6), pages 1228-1234, November.
    7. Bastiaensen, Johan & Marchetti, Peter, 2011. "Crisis in Nicaraguan microfinance: between the Scylla of business for profit and the Charybdis of clientelism," IOB Working Papers 2011.04, Universiteit Antwerpen, Institute of Development Policy (IOB).
    8. 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.
    9. Katchova, Ani L., 2009. "The Spatial Effect of Ethanol Biorefinery Locations on Local Corn Prices," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49309, Agricultural and Applied Economics Association.
    10. Leucci, A. C. & Ghinoi, S. & Sgargi, D. & Wesz, V. J., Jr., 2013. "Variation and links among food and energy international prices. An analysis through VAR models from 2000 to 2012," 2013 Second Congress, June 6-7, 2013, Parma, Italy 149923, Italian Association of Agricultural and Applied Economics (AIEAA).
    11. Peter Maniloff & Sul-Ki Lee, 2015. "The Ethanol Mandate and Corn Price Volatility," Working Papers 2015-01, Colorado School of Mines, Division of Economics and Business.
    12. Andrian, Leandro Gaston, 2010. "Essays on energy economics: Microeconomic and macroeconomic dimensions," ISU General Staff Papers 201001010800002725, Iowa State University, Department of Economics.

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