B y : A n d r e a R o s s

Cash Corn Prices from 1993 to 2013

September
19
th

2014
08
Fall
What is Cash Corn? What is the reason for this study?
Corn prices are ever changing as well as the demand and supply of corn. For those who do not know what cash corn
is, it is the corn you take to the elevator and sell at their set price. Which then the elevator sells to companies and so on.
That is why at harvest time the price of corn is always the lowest due to the high supply of corn. This cuts cost for storage
and is a of a less hassle then marketing there crops on the stock market. To sell on the
market it takes 5,000 bushels to make one contract; that is considerably large for a small-
scale farm. Many natural things affect corn and eventually the pricing such as: disease, pest
control, soil quality, moisture, temperature, flooding, drought, planting and harvest timing.
But other things affect the pricing such as the quantity left in storage from the previous
harvest, importing and exporting corn (exporting- if the country keeps it), land price/rent
price, if it is genetically modified, and the cost of production. And at the current price of
corn as of (9/18/14) at local elevators it was at around $3.10; this is not enough to even
match the cost of production. The world needs a continuing supply increase of corn to be
able to feed the Nine; which is predicted to be the earths capacity for the human
population. Corn is in countless products and is one of the most common base commodities
used in the worlds food supply.

Information:
The Ag Decision Maker out the Iowa State Extension offices collected the information.
Farmers all across Iowa gave prices they received from their local elevators. They have
prices from starting in January of 1925 to June of 2014. They calculated them for the
average of the year according to the market and calendar years. I used the information from
1993 to 2013, which is a span of 20 years as well as the averaging for the calendar year. The
information to left is what was used.

Possible Future?
If scientist find or are aloud to continue research to find ways to increase yielding, growth
rate, or other way of producing corn then the future nine billion occupants of the Earth will
be able to survive. There are many other reasons that might not be possible but when it
comes to food production this might be one way to lessen the gap of starvation. And if the
cost can decrease as well as with production, management, and transporting it; it is likely. But if things continue as they
are, we are unlikely to advance and go hungry.

Model 1:
Predictions:
1) For this year the price will drop down to about 3.50 per bushel due to higher supply from last years crop. But as the
demand for food increases with the population the need for higher yielding corn the price will increase as well per bushel.
2) I estimate in 10 years from now will be around at least $6.80 per bushel due to the increase population and its
population.
3) In 20 years the price will be around $8.50 per bushel. This will be cause by multiple reasons like a possible drought or
two, population, and maybe even a higher increase in urbanization, which will become a lost in farmable land.
Process:
The numbers where enter into excel and a scatter plot chart was made. Then the automatic trendline was added and
adjusted it to fit currency. The trend it set was y=$.18x+$1.33.
Explanation:
This model uses the y=mx+b form. What is accurate is the slope, which is $.18 (mi in the form) because it makes the most
sense and is what I found when doing my own calculation. But for y-intercept it was calculated at $1.33, which I find a bit
low especially for the future possibilities when figuring with crop production and mother nature.

Years since 1993 Prices
0
$2.15
1
$2.34
2
$2.47
3
$3.51
4
$2.52
5
$2.13
6
$1.80
7
$1.78
8
$1.81
9
$2.05
10
$2.18
11
$2.41
12
$1.90
13
$2.22
14
$3.37
15
$4.78
16
$3.81
17
$3.86
18
$5.96
19
$6.67
20
$6.22

Model 2:
Predictions:
1) The price for this year will be around $3.50 per bushel because at current prices the average year price will decrease.
2) In 10 years, the price per bushel could possibly be around $6.00 if the supply stays the same or decrease in the following
years due to possible damage to the crops during germination or other periods of its life (disease, weather, etc.).
3) In 20 years, the price per bushel could be around $7.40 if the supply stays the same feeding the population will become
impossible because it is expected to reach over 8 billion people by 2030.
Process:
Two points were picked on the trendline of model 1 they were:
(7,2.60)
(17,4.40)
Then the slope was found
4.40-2.60 1.80 = .18
17-7 10
y=.18x+b
A point was chosen to help find the y-intercept
18(7)+2.60 y=3.86
soy=$.18x+$3.86
Explanation:
The same steps were taken as for model 1 but for the trendline the y-intercept is $3.86. This lessens the steepness of the
line more then the model 1s line. It is more likely happen at this rate with current condition of growth rate and yields.

Similarities and Differences:
Both model have a slope of $.18 and were done in the y=mx+b form. The same form was used so that research
and calculations would be cohesive and for the slope both calculation were done separately with a result of a
same answer. Both models have different same y-intercept this done because of use of different ways of
calculating such as the need to find slope, which created the need to find two points on the trendline. As well as
different points were used to calculate the y-intercept.

So which one is better?
I find that model 2 is the better showing of cash corn prices. In model 2, I was able to find the best-fit trendline through
easier calculations and better ways of doing so. As well as I was able to show my work and so it is easier for people to
understand this process. I also previous knowledge of historical movement of corn prices and have worked with this type
of information before, so it made it easier for me to find the best trendline with my judgment.

Are functions important?
Functions are needed because they the inputs and outputs; they help you find the answer. I used functions when I found
the y-intercept they were 7 and 2.60. I also could have used 17 and 4.40 for my functions. So in y=.18x+3.86 your
functions are x is my input and y is my output.

Model 1 Chart


y = $.18x +$ 1.33
$1.50
$1.60
$1.70
$1.80
$1.90
$2.00
$2.10
$2.20
$2.30
$2.40
$2.50
$2.60
$2.70
$2.80
$2.90
$3.00
$3.10
$3.20
$3.30
$3.40
$3.50
$3.60
$3.70
$3.80
$3.90
$4.00
$4.10
$4.20
$4.30
$4.40
$4.50
$4.60
$4.70
$4.80
$4.90
$5.00
$5.10
$5.20
$5.30
$5.40
$5.50
$5.60
$5.70
$5.80
$5.90
$6.00
$6.10
$6.20
$6.30
$6.40
$6.50
$6.60
$6.70
$6.80
$6.90
$7.00
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
C
a
s
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C
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r
n
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B
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s
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P
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(
/
$
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1
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)

Years from 1993
Cash Corn Price Since 1993
Model 2



y = $0.18x + $3.86
$1.50
$1.60
$1.70
$1.80
$1.90
$2.00
$2.10
$2.20
$2.30
$2.40
$2.50
$2.60
$2.70
$2.80
$2.90
$3.00
$3.10
$3.20
$3.30
$3.40
$3.50
$3.60
$3.70
$3.80
$3.90
$4.00
$4.10
$4.20
$4.30
$4.40
$4.50
$4.60
$4.70
$4.80
$4.90
$5.00
$5.10
$5.20
$5.30
$5.40
$5.50
$5.60
$5.70
$5.80
$5.90
$6.00
$6.10
$6.20
$6.30
$6.40
$6.50
$6.60
$6.70
$6.80
$6.90
$7.00
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
P
r
i
c
e

/
$
.
1
0

Years from 1993
Cash Corn Price Since 1993
Resources:

http://www.extension.iastate.edu/agdm/crops/pdf/a2-11.pdf
https://ycharts.com/indicators/corn_price
http://en.wikipedia.org/wiki/Projections_of_population_growth