Structural Break and Causal Analyses of U.S. Corn Use for Ethanol and Other Corn Market Variables

Gbadebo A. Oladosu, Keith L. Kline and Johannes W. A. Langeveld
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Gbadebo A. Oladosu: Environmental Sciences Division, Oak Ridge National Laboratory, Oak Ridge, TN 37831, USA
Keith L. Kline: Environmental Sciences Division, Oak Ridge National Laboratory, Oak Ridge, TN 37831, USA
Johannes W. A. Langeveld: Biomass Research, Costerweg 1D, 6702 AA Wageningen, The Netherlands

Agriculture, 2021, vol. 11, issue 3, 1-15

Abstract: The causal basis for many of the relationships in models used to estimate the indirect effects of U.S. biofuels on global agricultural markets has not been adequately established. This paper addresses this gap by examining causal interactions among corn market variables through which the indirect effects of U.S. corn use for ethanol would be transmitted. Specifically, structural break and causal analyses of U.S. corn supply, uses, trade, and price are performed using quarterly data for marketing years 1986 to 2017. The structural break analysis identifies three breaks in corn use for ethanol that reflect the policy-driven evolution of U.S. corn ethanol production and other market factors. The causality analysis finds that U.S. corn use for ethanol is not a driver of the corn price and net corn exports. Changes in corn supply and domestic corn use are found to be the key factors in accommodating the large increase in corn use for ethanol between 2003 and 2010. These results mean that common assumptions linking U.S. corn ethanol production to large reductions in corn availability and exports, and higher global corn prices merit reconsideration.

Keywords: biofuels; corn ethanol; indirect land use effects; causality; structural breaks (search for similar items in EconPapers)
JEL-codes: Q1 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 (search for similar items in EconPapers)
Date: 2021
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