 Competitive Storage, Biofuels and the Corn PriceChristopher L. Gilbert and Harriet Kasidi Mugera Journal of Agricultural Economics, 2020, vol. 71, issue 2, 384-411 Abstract: The use of corn as an ethanol feedstock has been stimulated by US biofuels policy. This has changed both the position and the slope of the corn demand curve and increased the pass‐through from crude oil to corn prices. The principal constraints on ethanol consumption and production have been regulation (the biofuels mandate), capacity constraints in ethanol refining and the blend wall, which puts a ceiling on the ethanol content of gasoline. The incidence of these constraints has varied over time. We model these impacts within the competitive storage model using structural break regression analysis. Our analysis shows that the pass‐through has varied over time in relation to the share of ethanol in total US corn use. Our analysis provides robust empirical evidence of an increase in the pass‐through from crude oil to corn prices over the period from the start of the century to a high level over 2004–2008 when corn use in ethanol was growing very fast. This enhanced sensitivity was driven by competition for corn as an ethanol feedstock with stock demand exerting strong upward pressure on the corn price. Date: 2020 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:jageco:v:71:y:2020:i:2:p:384-411 Ordering information: This journal article can be ordered from Access Statistics for this article Journal of Agricultural Economics is currently edited by David Harvey More articles in Journal of Agricultural Economics from Wiley Blackwell |
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