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

Listed author(s):
  • Park, Hwanil
  • Fortenbery, T. Randall

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.

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File URL: http://purl.umn.edu/37565
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Paper provided by NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management in its series 2007 Conference, April 16-17, 2007, Chicago, Illinois with number 37565.

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Date of creation: Apr 2007
Handle: RePEc:ags:nccsci:37565
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  1. Randall Fortenbery, 2004. "Developed speculation and underdeveloped markets--the role of futures trading on export prices in less developed countries," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 31(4), pages 451-471, December.
  2. Gustafson, Cole R., 2002. "Potential Corn Acreage Expansion For Ethanol Production: Western North Dakota," Agribusiness & Applied Economics Report 23593, North Dakota State University, Department of Agribusiness and Applied Economics.
  3. Ferris, John N. & Joshi, Satish V., 2004. "Evaluating The Impacts Of An Increase In Fuel-Ethanol Demand On Agriculture And The Economy," 2004 Annual meeting, August 1-4, Denver, CO 20089, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  4. Torre Ugarte, Daniel de la, 2003. "An Energy Strategy Based On Energy Dedicated Crops Or Corn: Differential Economic And Regional Impacts," 2003 Annual Meeting, February 1-5, 2003, Mobile, Alabama 35165, Southern Agricultural Economics Association.
  5. Pothidee, Ajchara & Allen, Albert J. & Hudson, Darren, 1999. "Impacts Of Corn And Soybean Meal Price Changes On The Demand And Supply Of U.S. Broilers," 1999 Annual meeting, August 8-11, Nashville, TN 21602, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  6. S. Devadoss & Patrick C. Westhoff & Michael D. Helmar & Eric Grundmeier & Karl D. Skold & William H. Meyers & Stanley R. Johnson, 1989. "FAPRI Modeling System at CARD: A Documentation Summary, The," Food and Agricultural Policy Research Institute (FAPRI) Publications 89-tr13, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  7. Tomek, William G. & Myers, Robert J., 1993. "Empirical Analysis Of Agricultural Commodity Prices: A Viewpoint," Working Papers 6847, Cornell University, Department of Applied Economics and Management.
  8. S. Devadoss & Patrick C. Westhoff & Michael D. Helmar & Eric Grundmeier & Karl D. Skold & William H. Meyers & Stanley R. Johnson, 1989. "FAPRI Modeling System at CARD: A Documentation Summary, The," Center for Agricultural and Rural Development (CARD) Publications 89-tr13, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  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.
  10. Kevin McNew & Duane Griffith, 2005. "Measuring the Impact of Ethanol Plants on Local Grain Prices," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 27(2), pages 164-180.
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