Corn and Ethanol Prices Assignment Example | Topics and Well Written Essays - 500 words

Corn and Ethanol Prices - Assignment Example Drought conditions in Lowa resulted in reduced corn output levels, posing significant threats to related activities that use corn in one way or another. The article outlines that due to declined corn harvests as a result of drought, corn prices went up. This scenario pushed up commodity prices of related products, especially processed corn products or complements to corn products (Dvorchak, 2012). Corn producers and corn product manufacturers were faced with critical decisions to make in relation to the appropriate course of action to be taken. While these scenarios were taking place in Lowa, their impacts were bound to be experienced across the entire economy. The first category in this line is the farmers. While their output was low, market prices were going up. The implication of this was that supplies that they demanded became relatively expensive, especially those that were manufactured using corn; like livestock feed. Consequently, the farmers needed to reduce their livestock herds. To do so, they sold their livestock for slaughter. This increases livestock supply for slaughter purposes, triggering a fall in animal protein products in the meat markets. However, prices of processed corn products were going up, responding to low corn supply in the market. Amid the events that had occurred in Lowa, insurance claims were bound to increase. This is more so with the farmers, where their produce is insured against loss. The primary role of insurance companies is to reduce risks by designing measures and policies to mitigate risks at a premium that is charged to clients (intext). Insurance and reinsurance activities heightened, with beneficiaries filing claims accordingly relative to the underlying uncertainties in Lowa and in the national economy at large. Production of ethanol utilizes a significant percentage of national total corn output. The drought conditions in Lowa implied that the supply of corn would be inconsistent as demand rises. This