As summarized by Hilary Till, Contributing Editor, Global Commodities Applied Research Digest
In this paper, the authors examine whether one might attribute at least some of the past spikes in corn prices to renewable fuel mandates in the US. The authors provide statistical evidence that corn price dynamics changed after these mandates were put into effect: namely, corn prices began having a stronger response to global demand factors that, in turn, drive demand for crude oil. This increased connection between oil prices and a food staple is an important public policy issue. Although the authors do not suggest policy innovations, one might conclude that when food prices spike, perhaps there should be a temporary trigger to divert corn stocks to food rather than fuel.