Regression Analysis of Ethanol Production on Corn Prices in Nebraska

Nationwide, there has been a surplus of corn every year since 1975. It has not been very often that farmers have gotten excited about having high corn prices, but over the last few years, things have changed. Corn futures prices have reached above $3 a bushel on the Chicago Board of Trade, more than double what the same Board would have seen in 2005. (Wald, 2007)

Much of the increase is due to simple supply and demand. US farmers are expected to grow about 10.7 billion bushels of corn this year, and consumption could reach 11.5 billion bushels. (Hudson, 2007) Demand from ethanol plants has boosted corn consumption, tightened supplies and also raised prices to some of the highest levels in over 10 years. This trend shows no sign of slowing as the ethanol industry is still expanding.