JJATF - Are Corn And Ethanol Markets Correlated?
2024-06-05 06:20:00 ET
Summary
- Ethanol is an alcohol derived primarily from corn in the United States. Ethanol is blended with gasoline at a ratio averaging 10% ethanol and 90% petroleum-based gasoline.
- Ethanol production has plateaued over the past 15 years, but still comprises a large share of U.S. corn use.
- While the strong positive correlation between Corn and Ethanol futures prices offers valuable insights for hedging, it is essential to recognize the nuances of each market and the factors that contribute to independent price movements.
By Emily Balsamo and Arthur Yu
At a Glance
- Ethanol production has plateaued over the past 15 years, but still comprises a large share of U.S. corn use
- Corn and ethanol futures markets are correlated, but prices can move independently due to several factors