Disentangling Short-Run COVID-19 Price Impact Pathways in the US Corn Market

Using a data-modified version of the relative-price-of-a-substitute method, we distinguish the consequences of the sharp decline in US automotive fuel demand from the consequences of nonethanol demand changes in the US corn market. Our results suggest that—due to the renewable fuel standard and ethanol-gas price linkages—the COVID-19 pandemic affected corn markets more than it affected other agricultural commodities. The onset of the pandemic reduced Illinois cash prices for corn by approximately 18%. The majority of this impact (approximately 16%) was driven by pandemic-induced reductions in ethanol demand. Ethanol-driven and total impacts were greater in locations farther from terminal markets.