The price of crude oil is at record levels and pushing higher toward $100 a barrel. According to U.S. Department of Agriculture Chief Economist Keith Collins, the rising price of oil is driving corn and soybean prices higher as well.
"We've seen a very substantial increase in ethanol prices, some 30 to 35 cents a gallon over the last month or so, and that is restoring the margins for ethanol production and that's helping to pull up the price of corn," Collins says. "The price of oil rising strengthens the biodiesel price, strengthens the ethanol price, increases the margins in manufacturing those biofuels and that increases the demand for corn and soybean oils and other vegetable oils."
Corn prices were forecast by the USDA's November crop report at $3.50 a bushel while the report put soybean prices at $9 a bushel.