As Table 1 shows, Babcock estimates that U.S. corn prices would have been
lower if ethanol had not expanded, with the price impacts growing from 2.5% in 2005-6
to 20.9% by 2009-10. The two biggest jumps were in 2006-7 and 2008-9. These
percentages are generally consistent with the rising share of U.S. corn going to ethanol.
We use Babcock’s estimates to extrapolate an additional year based on the assumption
that the price impact varies in proportion to the share of corn going to ethanol. Our price estimate for 2010-11 is conservative because the share of corn to ethanol grew slightly in
2010-11, but we keep the price impact the same at 21%.2