High corn prices driven by a bad harvest could hurt corn ethanol producers, which are suffering from a saturated market for ethanol. Dry conditions in much of the United States caused the USDA to sharply lower its estimates for how much corn will be harvested, and increase its prediction for the season’s corn prices from its projection of between $4.20 and $5 a bushel last month to $5.40 to $6.40 a bushel.
High corn prices make it hard for corn ethanol producers to make a profit. And it’s times like these that make people question the wisdom of using corn for fuel, which some experts say increases the volatility of corn prices. The ethanol industry’s vulnerability to corn prices has been a perennial problem.