Corn Futures: Demand for Renewable Fuel Will Spur Growth, but Wholesale Bypass Will Hurt Profitability, According to a New Report

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As crops gain more prominence in nonfood uses, the Corn Wholesaling industry will get a revenue boost over the five years through 2016, with sales projected to grow at an annual rate of 2.9% to $136.9 billion, according to IBISWorld, the nation’s largest publisher of industry research. Prices of principal products such as corn and wheat are expected to climb through 2011, taking revenue along. Input prices are projected to continue in this upward trend through the remainder of the five-year period due to the federal mandate for biofuel increases as outlined in the Energy Policy Act of 2005. Farmers will likely take this as a cue to increase production, and genetically modified (GM) crops will help them meet these new goals.

IBISWorld Market Research

IBISWorld Market Research

Revenue is forecast to grow at an average annual rate of 2.9% to $136.9 billion

As crops gain more prominence in nonfood uses, the Corn Wholesaling industry will get a revenue boost over the five years through 2016, with sales projected to grow at an annual rate of 2.9% to $136.9 billion, according to IBISWorld, the nation’s largest publisher of industry research. Prices of principal products such as corn and wheat are expected to climb through 2011, taking revenue along. Input prices are projected to continue in this upward trend through the remainder of the five-year period due to the federal mandate for biofuel increases as outlined in the Energy Policy Act of 2005. Farmers will likely take this as a cue to increase production, and genetically modified (GM) crops will help them meet these new goals.

The Corn Wholesaling industry is a historically volatile one, and the five years to 2011 have proven no different. The rise and fall of crop prices have affected revenue and profit. The growth in demand for ethanol spurred demand for inputs such as corn and soybeans. Prices of these crops increased, as did production, taking revenue along. Meanwhile, the weakened US dollar during the economic recession made domestically grown crops more affordable to international markets. Exports, while officially taken into account in the respective farm industries, have grown significantly during the five years to 2011 and boosted industry revenue. Most recently, global shortages of food grains have caused the prices of key commodities (including corn and wheat) to spike significantly, causing revenue to jump 9.4% during the year. The interplay of these factors is expected to push revenue in the Corn Wholesaling industry up at an annual rate of 2.3% in the five years through 2011 to $118.7 billion.

Input prices and industry revenue have been extremely volatile over the five-year period. Following the Energy Policy Act of 2005, prices for soybeans and corn escalated to record highs. Consequently, revenue grew 17.1% in 2006 and 23.3% in 2007. The initial push from ethanol producers subsided in the three years following, reducing sales. And revenue fell by a drastic 12.9% in 2009 as domestic and international demand slowed. Unprecedented bad weather in several key grain supplying countries cut global supplies drastically in 2010. This factor continues to be an issue in 2011. As domestic farmers increase their plantings to meet world demand for wheat and corn, commodity prices rise again, causing industry revenue to climb.

According to IBISWorld analyst, Mary Gotaas, in the five years through 2016, IBISWorld anticipates that revenue will perform on a similar path as the previous five years. “Revenue is forecast to grow at an average annual rate of 2.9% to $136.9 billion,” says Gotaas. A second boom is expected as ethanol producers strive to meet Energy Policy Act standards, with growth spurts similar to those of 2007 and 2008 likely occur. Export markets will continue to be a large source of demand for this industry's products, though their level of demand will be affected by the strength of the US dollar against other currencies.

For more information, download the full report from IBISWorld on the Corn Wholesaling Industry

IBISWorld Industry Market Research Reports Contain:

About this Industry
Industry Definition
Main Activities
Similar Industries
Additional Resources

Industry at a Glance

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle

Products & Markets
Supply Chain
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Major Markets

Globalisation & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
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Major Companies

Operating Conditions
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Key Statistics
Industry Data
Annual Change
Key Ratios

Jargon & Glossary

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About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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James Karklins
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