Ethanol’s Effect on Corn Prices


Any market that uses a large amount of the nation’s corn supply is bound to have a positive effect on the price of corn.

Studies have shown that corn prices in markets near ethanol plants will increase between five and eight cents per bushel. Ethanol production makes huge amounts of the nation’s corn disappear—some 1.4 billion bushels went into ethanol production in 2004—and that affects overall corn supply and helps shore up corn prices nationwide.

According to the U.S. Department of Agriculture, ethanol production adds 30 cents to the value of a bushel of corn. The Renewable Fuels Association notes that ethanol production adds $4.5 billion to U.S. farm income annually.