Updated- November 16, 2011

by Tim McMahon

Corn has almost quadrupled in price in nominal terms since 2000. In July of 2000 corn was making lows of around $75/ metric ton with highs for the year up around $95/ton.  In August of 2011 corn was selling for over $310 a ton.  Roughly from 3 to 4 times as much.  Obviously , corn is volatile if it can move 30% in a few months. This can be due to weather conditions causing crop failures or other external factors.

There has been speculation that the recent dramatic increase in the price of corn is the result of ethanol becoming part of the gasoline mix. 

But obviously that is only part of the equation. The real question is, "What is the price of corn in real (inflation adjusted) terms.

In the chart below, the black line represents the nominal (or actual price) per ton of corn since 1981. As you can see the nominal price stayed between $75 and $150 up until 2006. The only exception was a couple of months during 1996 when prices spiked up to $200. From 2006 onward however, prices have been climbing and haven't gone below $150 a ton. One of the reasons given for this "floor" under the price of corn is the increased demand from ethanol producers who use it to produce a gasoline additive / alternative.

 

Click Chart for larger Image

However, when you adjust corn prices for inflation you find that the current spike in the price of corn is actually lower than the peak made in 1984 and just slightly higher than the spike in June of 1996. During the early 2000's corn prices were so low farmers could hardly afford to produce it anymore.

It is not surprising to see corn and other commodity prices rising along with oil.  All commodities rely on oil for production and transportation to some extent (unless you are using oxen to plow your field).  

So you would expect a positive feedback relationship for the price of oil.  But there are other reasons too.  Both oil and corn have become somewhat interchangeable with the advent of corn based ethanol. 

But an even more important reason is that inflation is primarily a monetary event.  It is caused by an increase in the money supply and as time goes on it spreads evenly over all commodities.  Initially,  corn or oil or pork bellies may rise quicker but as time goes on it levels out somewhat like water flowing to all the various commodities.

Month	Nominal Corn Price--  $ per Metric Ton	Inflation Adjusted Corn  Price
Oct-81	111.41	270.080981
Nov-81	110.62	267.307268
Dec-81	105.51	254.145529
Jan-82	113.38	272.233436
Feb-82	112.59	269.479285
Mar-82	114.17	273.550112
Apr-82	116.14	277.097312
May-82	116.53	275.415857
Jun-82	114.96	268.343899
Jul-82	111.41	258.723729
Aug-82	101.18	234.485945
Sep-82	97.63	225.79655
Oct-82	90.94	209.681525
Nov-82	102.75	237.395487
Dec-82	105.51	244.771309
Jan-83	108.26	250.637397
Feb-83	117.32	271.335155
Mar-83	125.19	289.536721
Apr-83	133.46	306.472076
May-83	133.85	305.508577
Jun-83	135.03	307.272639
Jul-83	140.54	318.530604
Aug-83	152.75	345.167742
Sep-83	147.63	331.94173
Oct-83	148.02	331.830064
Nov-83	146.84	328.534186
Dec-83	142.91	319.425717
Jan-84	142.12	315.789524
Feb-84	137	302.926533
Mar-84	146.06	322.329934
Apr-84	148.02	325.071158
May-84	146.06	319.836086
Jun-84	146.84	320.613883
Jul-84	142.51	309.964041
Aug-84	138.58	300.262413
Sep-84	130.31	280.999243
Oct-84	121.25	260.717438
Nov-84	117.32	252.266968
Dec-84	113.77	244.633591
Jan-85	119.68	256.853699
Feb-85	119.68	255.642125
Mar-85	120.47	256.362198
Apr-85	120.07	254.315898
May-85	116.92	246.720814
Jun-85	116.14	244.391589
Jul-85	114.96	241.459723
Aug-85	105.51	221.200738
Sep-85	101.96	213.166068
Oct-85	97.63	203.362302
Nov-85	106.29	220.791634
Dec-85	108.66	225.095205
Jan-86	107.08	221.21497
Feb-86	104.33	216.12537
Mar-86	100.78	209.730776
Apr-86	101.57	211.764097
May-86	105.51	219.372633
Jun-86	104.72	216.537051
Jul-86	83.46	172.576225
Aug-86	75.19	155.192297
Sep-86	66.14	135.893693
Oct-86	65.35	134.148797
Nov-86	69.29	142.10789
Dec-86	70.08	143.598042
Jan-87	68.11	138.682863
Feb-87	66.93	135.791734
Mar-87	71.65	144.719578
Apr-87	74.41	149.494114
May-87	80.7	161.55769
Jun-87	80.31	160.210313
Jul-87	76.37	151.948785
Aug-87	71.26	141.038116
Sep-87	72.83	143.393404
Oct-87	78.74	154.626102
Nov-87	81.89	160.67258
Dec-87	83.07	162.987803
Jan-88	86.61	169.492851
Feb-88	87.4	170.596512
Mar-88	90.55	175.986451
Apr-88	89.76	173.557207
May-88	90.15	173.717899
Jun-88	120.07	230.392962
Jul-88	126.77	242.222702
Aug-88	118.89	226.211703
Sep-88	121.25	229.161488
Oct-88	121.25	228.398887
Nov-88	113.38	213.396617
Dec-88	117.32	220.44574
Jan-89	118.5	221.559773
Feb-89	117.58	218.9357
Mar-89	118.89	220.107872
Apr-89	115.35	212.166225
May-89	117.32	214.569562
Jun-89	113.38	206.862312
Jul-89	107.48	195.624832
Aug-89	101.18	183.862574
Sep-89	103.14	186.824496
Oct-89	106.29	191.610574
Nov-89	108.66	195.41625
Dec-89	108.66	195.106311
Jan-90	105.9	188.210235
Feb-90	106.29	188.017876
Mar-90	109.84	193.240735
Apr-90	118.5	208.152742
May-90	121.25	212.488748
Jun-90	120.07	209.286909
Jul-90	114.96	199.611642
Aug-90	109.84	188.982391
Sep-90	102.36	174.653003
Oct-90	100	169.603745
Nov-90	100	169.223468
Dec-90	102.36	173.217142
Jan-91	105.51	177.486476
Feb-91	106.29	178.533294
Mar-91	109.05	182.897852
Apr-91	110.23	184.603453
May-91	105.74	176.561626
Jun-91	105.11	174.993466
Jul-91	105.73	175.767198
Aug-91	110.12	182.52914
Sep-91	108.85	179.635028
Oct-91	109.52	180.477641
Nov-91	106.8	175.484491
Dec-91	106.72	175.225882
Jan-92	109.59	179.677606
Feb-92	113.92	186.103033
Mar-92	116.68	189.654001
Apr-92	109.06	177.014152
May-92	109.18	176.955224
Jun-92	110.2	177.971428
Jul-92	102.39	165.005311
Aug-92	97.54	156.743111
Sep-92	98.22	157.389035
Oct-92	94.56	150.989914
Nov-92	95.17	151.749905
Dec-92	94.04	150.053776
Jan-93	94.1	149.412455
Feb-93	94.25	149.127738
Mar-93	97.54	153.795991
Apr-93	100.49	158.007266
May-93	99.22	155.793978
Jun-93	92.73	145.401796
Jul-93	101.89	159.76479
Aug-93	100.31	156.852835
Sep-93	101.03	157.652058
Oct-93	105.77	164.368903
Nov-93	115.93	180.034201
Dec-93	121.23	188.264869
Jan-94	126.72	196.252183
Feb-94	123.65	190.844967
Mar-94	120.11	184.751537
Apr-94	113.42	174.224354
May-94	110.6	169.777374
Jun-94	112.08	171.468011
Jul-94	98.73	150.637098
Aug-94	96.16	146.125123
Sep-94	97.61	147.931418
Oct-94	96.11	145.560684
Nov-94	95.61	144.609965
Dec-94	102.56	155.121829
Jan-95	106.9	161.040618
Feb-95	106.98	160.520335
Mar-95	109.63	163.95333
Apr-95	109.64	163.428561
May-95	111.93	166.513157
Jun-95	120.01	178.182192
Jul-95	127.31	189.020705
Aug-95	126.3	187.030558
Sep-95	130.51	192.886454
Oct-95	140.82	207.447009
Nov-95	143.21	211.105152
Dec-95	148.19	218.588456
Jan-96	156.67	229.749858
Feb-96	164.71	240.760509
Mar-96	170.96	248.612294
Apr-96	189.03	273.834687
May-96	204	294.954559
Jun-96	196.64	284.131624
Jul-96	197.62	285.002026
Aug-96	186.82	268.912722
Sep-96	145.24	208.399151
Oct-96	128.61	183.954547
Nov-96	117.14	167.231752
Dec-96	116.84	166.803466
Jan-97	118.7	168.92629
Feb-97	121.75	172.72404
Mar-97	127.86	180.938682
Apr-97	124.71	176.260692
May-97	118.61	167.743878
Jun-97	112.58	159.017319
Jul-97	106.42	150.129114
Aug-97	111.95	157.635765
Sep-97	112.24	157.651942
Oct-97	120.24	168.470675
Nov-97	117.4	164.593346
Dec-97	113.6	159.463271
Jan-98	114.37	160.2461
Feb-98	113.62	158.900272
Mar-98	113.84	158.913481
Apr-98	106.69	148.657578
May-98	105.97	147.382269
Jun-98	101.75	141.339489
Jul-98	100.9	139.987003
Aug-98	88.36	122.439165
Sep-98	85.71	118.621907
Oct-98	95.49	131.835008
Nov-98	97.38	134.444372
Dec-98	95.32	131.680596
Jan-99	97.45	134.295353
Feb-99	94.56	130.154223
Mar-99	96.43	132.325921
Apr-99	94.04	128.114506
May-99	92.72	126.316216
Jun-99	92.95	126.629554
Jul-99	83.6	113.550064
Aug-99	86.38	117.045158
Sep-99	87.12	117.485393
Oct-99	85.65	115.297019
Nov-99	85.41	114.90563
Dec-99	87.22	117.340699
Jan-00	92.95	124.679099
Feb-00	95.08	126.785092
Mar-00	95.17	125.867328
Apr-00	95.54	126.282909
May-00	95.53	126.122438
Jun-00	84.04	110.373671
Jul-00	75.06	98.3516219
Aug-00	75.24	98.5874771
Sep-00	80.15	104.476932
Oct-00	84.71	110.230591
Nov-00	88.94	115.668488
Dec-00	96.22	125.20821
Jan-01	94.3	121.938894
Feb-01	92.38	118.9805
Mar-01	91.01	116.949916
Apr-01	87.55	112.058556
May-01	85.08	108.406858
Jun-01	83.16	105.781856
Jul-01	90.75	115.761723
Aug-01	92.88	118.478775
Sep-01	89.74	113.959734
Oct-01	86.27	109.923127
Nov-01	89.88	114.71657
Dec-01	92.31	118.284791
Jan-02	91.97	117.582944
Feb-02	90.73	115.54093
Mar-02	89.86	113.793015
Apr-02	87.11	109.697071
May-02	90.33	113.751996
Jun-02	93.17	117.263172
Jul-02	99.7	125.342441
Aug-02	109.89	137.694542
Sep-02	113.94	142.532645
Oct-02	109.65	136.939121
Nov-02	108.65	135.690246
Dec-02	107.01	133.937597
Jan-03	105.75	131.77777
Feb-03	106.04	131.128798
Mar-03	105.06	129.141098
Apr-03	105.25	129.656204
May-03	107.82	133.039304
Jun-03	106.99	131.871436
Jul-03	97.61	120.179194
Aug-03	100.31	123.03516
Sep-03	103.22	126.194253
Oct-03	104.17	127.493381
Nov-03	108.03	132.575938
Dec-03	111.98	137.572564
Jan-04	115.09	140.706225
Feb-04	122.91	149.459748
Mar-04	128.43	155.172087
Apr-04	133.39	160.650517
May-04	129.3	154.818801
Jun-04	123.23	147.084132
Jul-04	104.48	124.902144
Aug-04	104.04	124.310506
Sep-04	97.76	116.560911
Oct-04	93.37	110.743472
Nov-04	93.75	111.135962
Dec-04	95.59	113.734017
Jan-05	95.98	113.958509
Feb-05	94.36	111.392521
Mar-05	99.94	117.064225
Apr-05	96.39	112.151697
May-05	95.27	110.962596
Jun-05	97.56	113.571377
Jul-05	105.6	122.364676
Aug-05	98.64	113.717757
Sep-05	96.99	110.465658
Oct-05	101.5	115.370138
Nov-05	95.97	109.96773
Dec-05	102.66	118.111686
Jan-06	102.7	117.263927
Feb-06	106.92	121.836605
Mar-06	104.89	118.865359
Apr-06	107.82	121.154899
May-06	110.57	123.631457
Jun-06	109.55	122.249485
Jul-06	114.24	127.107297
Aug-06	115.21	127.935083
Sep-06	120.26	134.201032
Oct-06	142.17	159.515726
Nov-06	164.08	184.372991
Dec-06	160.66	180.261635
Jan-07	165.1	184.679606
Feb-07	177.35	197.326593
Mar-07	169.52	186.912657
Apr-07	152.58	167.148797
May-07	156.44	170.336483
Jun-07	164.5	178.766004
Jul-07	147.13	159.930301
Aug-07	151.01	164.449445
Sep-07	160.05	173.81496
Oct-07	164.09	177.822022
Nov-07	171.06	184.280755
Dec-07	180.25	194.311381
Jan-08	206.53	221.540312
Feb-08	219.95	235.25246
Mar-08	233.85	247.970059
Apr-08	246.67	259.987376
May-08	243.46	254.461283
Jun-08	287.11	297.089931
Jul-08	266.94	274.775971
Aug-08	235.16	243.033158
Sep-08	233.91	242.076103
Oct-08	182.96	191.279551
Nov-08	164.27	175.093222
Dec-08	158.16	170.342416
Jan-09	173.24	185.775394
Feb-09	163.13	174.06822
Mar-09	164.52	175.125561
Apr-09	168.72	179.149086
May-09	180.31	190.904022
Jun-09	178.83	187.724532
Jul-09	151.76	159.56114
Aug-09	152.01	159.466332
Sep-09	150.57	157.856961
Oct-09	167.22	175.14407
Nov-09	171.61	179.614976
Dec-09	164.58	172.560967
Jan-10	167.21	174.721397
Feb-10	161.63	168.848655
Mar-10	159.01	165.432329
Apr-10	157.66	163.7434
May-10	163.77	169.957407
Jun-10	152.87	158.800625
Jul-10	163.92	170.243384
Aug-10	175.6	182.122502
Sep-10	205.84	213.361619
Oct-10	235.7	244.008896
Nov-10	238.24	246.534732
Dec-10	250.63	258.911188
Jan-11	265.29	272.756375
Feb-11	293.4	300.177225
Mar-11	290.43	294.269181
Apr-11	318.74	320.88708
May-11	308.58	309.204086
Jun-11	310.54	311.501658
Jul-11	300.83	301.494451
Aug-11	310.34	310.170135
Sep-11	296.3	295.688827
Oct-11	274.85	274.85

See the article on the Inflation implications of Ethanol for more information.

Corn Prices Courtesy of Indexmundi

Inflation based on CPI-U for  U.S. Bureau of Labor Statistics.

 

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