Among US farmers, corn is king – more acres of corn are planted each year than any other crop. Yet very little of that corn is sweet corn that ends up directly on your plate. Nearly half of all domestic corn use is devoted to creating ethanol, a gasoline additive that’s use is mandated by the Environmental Protection Agency (EPA).
Based on a law passed in 2007, the amount of corn-based ethanol produced next year was set to rise to 14.4 billion gallons. Rising ethanol production and corn consumption has been cited as a major factor in high corn prices over recent years, a welcome boost to farmers.
Other corn consumers, like the livestock industry, which accounts for about 40 percent of domestic use, have criticized the ethanol mandate for its impact on corn prices. Additionally, auto manufacturers have concerns about fuel containing more than 10 percent ethanol, which has essentially capped the amount of ethanol that can be used by drivers. As a result of these concerns, the EPA reportedly proposed this week to cut the ethanol mandate to 13 billion gallons next year, a significant decrease.
Although the proposal has yet to be approved by the White House, corn prices plunged when the news hit the market, falling to $4.33 per bushel by Friday, the lowest price in over three years.
Washington Talks, Gold Balks
Gold prices were clobbered late this week as news emerged that Republican leaders were meeting with President Obama to discuss solutions that would lead to a short-term extension of the government’s borrowing authority. As a result of the talks, investors decided it was less likely that there would be a “debt ceiling” crisis or potential US credit default, which caused them to sell gold that they had been holding as an insurance policy against a potential crisis. By Friday, gold had fallen under $1260 per ounce, the lowest price in three months.