The Impact of Ethanol Production onSpatial Grain Market Relationships

摘要

Using cointegration theory, grain markets in Michigan, Kansas, Iowa and Indiana were examinedto determine if increased ethanol production affected spatial corn price relationships in thesestates from 1998 through 2008. It was determined that corn prices operated in a stable, long-runequilibrium from 1998 through 2008 and increased ethanol production did not have an effect onthis relationship. These findings suggest policy boosting ethanol production has not altered relationships between spatially dispersed corn markets. In addition to policy makers, this informationis also useful to farmers and commodity traders who utilize market information when managingtheir businesses.