When most people think about corn all then relate to it is what they have at dinner. In reality corn is used for much more than just a dinner side-dish. Corn is used to make ethanol which is used in gasoline to help better fuel economy. The use of ethanol allows the US to rely less on other countries to provide crude oil for gasoline.
“At the Chicago Board of Trade, the corn futures contract for March delivery jumped 24.25 cents a bushel, or 3.6%, to settle at 6.98 a bushel. While the USDA left its wheat and soybean projections largely unchanged, prices of these commodities rose in sympathy with corn,” according to an article in the wall street journal. This suggests that the amount of corn available for sale is shrinking in comparison to the demand of the corn needed.
Most of the corn harvested in the US is used in the creation of ethanol. According to the USDA the one month-old projection of how much of the recent U.S. corn harvest will end up as ethanol by 50 million bushels to 4.95 billion bushels, or 40% of the harvest. The growing ethanol industries is benefiting in this because they get to sell more to get larger profits. Washington is mandating that gasoline blenders use 12.6 billion gallons of biofuel this year, up from the 2010 mandate of 12 billion gallons. With the mandated increase in cleaner fuel the bio fuel industry is making loads of profit.
According to the USDA projections released Wednesday, the 12.4 billion bushels of corn harvested by U.S. farmers last fall will dwindle to just 675 million bushels by Aug. 31, when a new harvest begins to replenish inventories. Along with the short supply of corn there is also a high demand for wheat throughout the world because of the droughts in Russia last year that wiped out their crops. There are large demands for agricultural products largely in Asia. According to an article in the economist, “on February 8th the UN Food and Agriculture Organization (FAO) warned that a drought in China’s wheat belt...