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Climate Change May Create Price Volatility in the Corn Market Apr 24, 2012 By the time today's elementary schoolers graduate from college, theU.S. corn belt could be forced to move to the Canadian border toescape devastating heat waves brought on by rising globaltemperatures. If farmers don't move their corn north, the morefrequent heat waves could lead to bigger swings in corn prices --"price volatility" -- which cause spikes in food prices, farmers'incomes and the price livestock farmers and ethanol producers payfor corn. A study published in the journal Nature Climate Change shows for the first time climate change's outsized influence onyear-to-year swings in corn prices. Researchers from Stanford and Purdue universities found thatclimate change's impact on corn price volatility could far outweighthe volatility caused by changing oil prices or government energypolicies mandating biofuels production from corn and other crops. "Frankly, I was surprised that climate had the largest effect ofthese three influences," said Noah Diffenbaugh, an assistantprofessor of environmental Earth system science at Stanford'sSchool of Earth Sciences and a fellow at the Stanford WoodsInstitute for the Environment. "These are substantial changes inprice volatility that come from relatively moderate globalwarming." The study, based on economic, climatic and agricultural data andcomputational models, finds that even if climate change stayswithin the internationally recognized target limit of 3.6 degreesFahrenheit above pre-industrial levels, the temperature changescould still make damaging heat waves much more common over the U.S.corn belt. "Severe heat is the big hammer," Diffenbaugh said. "Even one or twodegrees of global warming is likely to substantially increase heatwaves that lead to low-yield years and more price volatility." The researchers calculate that when climate change's effects arecoupled with federal mandates for biofuel production, corn pricevolatility could increase sharply over the period from 2020 to2040. Increasing heat waves will lead to low-yield years, andgovernment-mandated corn sales to ethanol producers limit themarket's ability to buffer against low-yield years. "By limiting the ability of commodity markets to adjust to yieldfluctuations, biofuels mandates work in exactly the wrongdirection," said Thomas Hertel, a professor of agriculturaleconomics at Purdue University who participated in the study. "Our results suggest that energy policy decisions are likely tointeract with climate change to affect corn price volatility, andthat the market effect of a binding biofuel mandate is likely tointensify as the climate warms," Diffenbaugh said. Diffenbaugh and Hertel also explored the potential of farmers toadapt to the changing climate. They found that, unless corn farmersincrease their crops' heat tolerance by as much as 6 degreesFahrenheit, the areas of high corn production would have to movenorthward from the current U.S. corn belt to near the Canadianborder in order to avoid excessive heat extremes. "Our goal was to explore the interacting influences of climate,energy markets and energy policy," said Diffenbaugh. "It is clearfrom our results that those policy decisions could strongly affectthe impacts that climate change has on people. And, importantly, wealso identify potential opportunities for reducing those impactsthrough adaptation.". We are high quality suppliers, our products such as Corrugated Cardboard Display Manufacturer , Cosmetic Display Racks for oversee buyer. To know more, please visits Floor Display Stands.
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