Links between energy and agricultural markets

A line chart showing how corn and crude prices are linked through ethanol.

Barrels and bushels are now more intertwined through corn-based ethanol. While energy as an input remains a cost for corn production, it is now also an indirect competitor as it influences corn demand and prices. Swings in fossil fuel prices can shift demand for corn as an ethanol feedstock. High oil prices boost demand for ethanol when ethanol is priced lower than gasoline on an energy-equivalent basis. Although ethanol has a large impact on the corn market (33 percent of use), its impact on the massive gasoline market is limited (less than 8 percent of use). However, its role in both markets is growing. This chart is from the Bioenergy topic, April 2011.

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