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The Impact of Increased Ethanol Production on Corn Basis in South Dakota

Author

Listed:
  • Olson, Andrea
  • Klein, Nicole L.
  • Taylor, Gary

Abstract

A basis model is used to empirically estimate the impact of ethanol production on the South Dakota corn basis on the district and "State" levels. Monthly data is used to estimate basis as a function of futures price, supply, demand, storage, and transportation costs. The independent variables used are corn futures prices, corn production, corn usage for ethanol production, corn usage by cattle, Midwest No. 2 Diesel retail sales prices, storage availability, and unit train transportation The regression results show the impact on corn basis varies by district from $0.04 to $0.27 per bushel, with a "State" impact of $0.24 in 2005. The impact from an additional 40 million gallon per year (MGY) ethanol plant ranges from $0.06 to $0.16 per bushel, with a "State" impact of $0.03. The impact from an additional 100 MGY ethanol plant ranges from $0.16 to $0.40 per bushel, with a "State" impact of $0.08.

Suggested Citation

  • Olson, Andrea & Klein, Nicole L. & Taylor, Gary, 2007. "The Impact of Increased Ethanol Production on Corn Basis in South Dakota," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon 10255, Western Agricultural Economics Association.
  • Handle: RePEc:ags:waeapo:10255
    DOI: 10.22004/ag.econ.10255
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    File URL: http://ageconsearch.umn.edu/record/10255/files/sp07ol03.pdf
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    Cited by:

    1. Xiaodong Du & David A. Hennessy & William M. Edwards, 2007. "Determinants of Iowa Cropland Cash Rental Rates: Testing Ricardian Rent Theory," Center for Agricultural and Rural Development (CARD) Publications 07-wp454, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    2. Liu, Bing & Hudson, Darren & Farmer, Michael, 2015. "The Impact of a Sorghum-Based Ethanol Plant on Local Cotton Acreage: A Spatial Approach," 2016 Annual Meeting, February 6-9, 2016, San Antonio, Texas 229799, Southern Agricultural Economics Association.

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    Keywords

    Crop Production/Industries;

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