Analysis Predicts Moderation in Corn Prices

An Ethanol Promotion Information Council analysis says corn prices will adjust to increased demand.

Published on: Jan 17, 2007

The Ethanol Promotion Information Council says in a new analysis that corn prices will moderate after some adjustments to increased demand due to the booming ethanol industry.

In a paper with the to-the-point title "Concerns About High Corn Prices Unfounded," EPIC predicts that rising corn production would help to compensate for higher prices caused by increased corn demand. As the ethanol industry demands more corn, EPIC expects corn supply to come not only from more corn acres, but from other corn markets such as exports and the sweeteners market. In addition, the analysis says livestock operations feeding dried distillers grains left over from ethanol distillation will help to make up for demand for corn as feed.

While this year's corn prices are high, the EPIC analysis says that in historical perspective, prices have reached comparable levels in the past, such as a $3.53 per bushel average in 1995-96 and $3.23 in 1983-4.

The report is available at www.epicinfo.org/epic_ddgs.pdf.