Prices Tied to Cost of Oil

Lower oil prices equals lower ethanol prices equals lower corn prices. That's according to Darrel Good, University of Illinois Extension marketing specialist, who says corn prices have a 90% correlation with ethanol prices.

He says the decline in ethanol prices has followed the decline in unleaded gasoline prices which has followed the decline in crude oil prices. At press time, the wholesale price of unleaded gasoline has declined by about 40% since early October. While ethanol production will likely continue to expand as new capacity is completed, that expansion will only occur at relatively low corn prices as long as ethanol prices are low.