Friday, August 17, 2012

The Causes of the Rising Price of Corn

Corn Prices are sky rocketing based on many factors. Currently, the drought is impacting farmers production output, thus this shrinks the inventory. This action forces prices to rise. However, mandating that farmers must allocate a certain percentage towards ethanol is another factor. The Government mandate calls for 40% of all corn production must be allocated towards fuel production.  This mandate has cause corn prices to increase, this is before the drought. Now with the drought in full swing, corn prices have increased well over 60% since June. While investors can play the futures market with this commodity and possibly make some gains, overall the global economic impact is major. The article titled, "End the Ethanol Mandate" discusses this in more detail.

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