Ethanol, Mandates, and Drought: Insights from a Stochastic Equilibrium Model of the U.S. Corn Market

摘要: The outlook for U.S. corn markets is inextricably linked to what happens the ethanol industry, which depends, in turn, on level of government subsidies and mandates. We develop a stochastic partial equilibrium model simulate outcomes market 2008/09 marketing year gain insight into these linkages. includes five variables that are major contributors price volatility: planted acreage, yield, export demand, gasoline prices, capacity industry. Our results indicate integration has increased volatility passage expanded mandates Energy Independence Security Act (EISA) had modest effects prices. Model an expected average $4.97 per bushel 17.5% without 10 billion gallon EISA mandate but with maintenance $0.51-per-gallon tax credit. Imposition increases by 7.1% 12.1%. modest, as production would 9.5 gallons because high binding probability 37.8%, indicates additional or subsidy will be needed ensure met. High prices caused drought can cause bind. Fixing 2008 yields at extreme levels $6.59 $7.99 mandate. An $0.73 met this scenario. Elimination current blenders credit result not being all cases. On average, $0.41 least year.