News Release: Commodities
Prices of many agricultural commodities are at or near the highest levels they've ever been. What caused prices to rise and stay high? In this three-part series, Purdue agricultural economists look at how grain shortages, ethanol policy, trade practices and Federal Reserve policy are influencing markets.
Ethanol mandate means corn demand less responsive to price
Federal law that helped jump-start the ethanol industry in the United States also is shifting normal supply-and-demand forces within commodities markets, said a Purdue University agricultural economist.
Not quite four years after Congress passed the Energy Independence and Security Act in 2007, markets are struggling to meet both the law's renewable fuels standard and grain demands from the livestock, food and export sectors, said Wally Tyner, an energy policy specialist.
Ag economist: Higher commodity prices the "new normal"?
Higher commodity prices might be the rule rather than the exception in the coming years, a Purdue University agricultural economist says.
While prices regularly rise and fall, they have trended upward in a way that suggests they've reached a plateau, said Mike Boehlje.
Grain production not keeping up with demand, economist says
Grain crops are being gobbled up faster than farmers can grow them, and that could portend trouble down the road if production doesn't catch up, said a Purdue University agricultural economist.
There have been two major demand surges in the past five years, including the rising use of corn to produce ethanol and China's purchases of soybeans, Chris Hurt said.