U.N. Report: Ethanol creating corn and oil price link

MEDILL Reports Chicago
by Nicholas Allen
Oct 07, 2008

The price of corn has become tied more and more to the ups and downs of oil prices and oil companies' increasing appetite for ethanol, according to a report released Tuesday by the United Nations.

“The historic linkages between agriculture and the energy sector are becoming stronger and are changing in character,” according to the report, by the U.N.'s Food and Agriculture Organization. “Biofuel demand will continue to exercise upward pressure on agricultural prices for considerable time to come.”

The relationship between corn and oil has been slowly tightening for the last decade according to Vic Lespinasse, an analyst with Chicago-based GrainAnalyst.com. “It’s only been in the last several years that crude oil prices have exploded, and that really increased the demand for biofuel.”

Read the full story