The Impact of Increased Ethanol Production on Corn Basis in South Dakota

A basis model is used to empirically estimate the impact of ethanol production on the South Dakota corn basis on the district and “State” levels. Monthly data is used to estimate basis as a function of futures price, supply, demand, storage, and transportation costs. The independent variables used are corn futures prices, corn production, corn usage for ethanol production, corn usage by cattle, Midwest No. 2 Diesel retail sales prices, storage availability, and unit train transportation The regression results show the impact on corn basis varies by district from $0.04 to $0.27 per bushel, with a “State” impact of $0.24 in 2005. The impact from an additional 40 million gallon per year (MGY) ethanol plant ranges from $0.06 to $0.16 per bushel, with a “State” impact of $0.03. The impact from an additional 100 MGY ethanol plant ranges from $0.16 to $0.40 per bushel, with a “State” impact of $0.08.


Issue Date:
2007
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/10255
Total Pages:
40
Series Statement:
Selected Paper 174357




 Record created 2017-04-01, last modified 2017-12-05

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