Corn price volatility expected to intensify with climate change

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Except for the late-season snowstorm that affected much of Pennsylvania and western New York on Monday, it’s been a pretty warm spring across most of the U.S.

By all accounts, the corn crop is off to a great start with the potential for high yields. According to the USDA “Crop Progress” report on Monday, 28 percent of the corn crop has been planted in the top 18 states, which is well above the five-year average of 15 percent for corn planted at the very same time of the year.

But what if things keep getting warmer? Is there a point where corn crops could be hurt by the apparent rise in global temperatures?

A recent study published in Nature Climate Change points out that increased temperatures could reduce grain yields in the coming decades. That, in turn, is expected to impact supply and cause swings in corn prices.

When coupled with federal mandates for biofuel production, the price volatility could increase by about 50 percent over the period from 2020-2040 as compared to recent history, study authors say.

The study used a high-resolution climate model for the United States that takes into account climate history to produce 25-kilometer "snapshots" of the Midwest under projected future climate scenarios, says Thomas Hertel, professor of agricultural economics at Purdue University and a study co-author. Five simulations from 1950-2040 were combined to estimate future temperature extremes. Those predictions were paired with a model that uses temperature, precipitation and technology trends to predict corn yields.

The study finds that even if temperatures stay within the internationally recognized climate change target ― a limit of 3.6 degrees Fahrenheit above pre-industrial levels ― global warming is still enough to make damaging heat waves much more common over the U.S. Corn Belt.

"Severe heat is the big hammer," said Noah Diffenbaugh, assistant professor of earth sciences at Stanford University and a study co-author. "We find that even one or two degrees of global warming is likely to increase heat waves enough to cause much higher frequency of low-yield years, leading to greater volatility of corn prices."

To access an abstract of their paper, click here and then “Corn market response to climate volatility.”  

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ed g    
new york  |  April, 24, 2012 at 11:21 AM

wow going all the way back to 1950! I would expect more from people in agriculture than to continue to sound like chicken little the sky is falling the sky is falling. The only thing consistent with the weather is that one season will follow the next. This hype over variances in the temperatures amazes me. The way you people talk you would think that because it was 50 last year on april 23rd than every year it should be 50 on april 23rd. Couldn't even go back as far as the 30s. get out of the office once and awhile and you would realize that the weather changes.

Washington state  |  April, 24, 2012 at 11:29 AM

I totally agree, weather changes all the time and from year to year. THis is just another reason for the speculators to run up commodity prices!

Texas  |  April, 26, 2012 at 02:48 PM

So, please! Why are "WE" continuing to let EPA "OUR" government?, to dictate we use 40% of "our" corn crop to be put in our fuel tanks to "burn up", and export to foreign countries while commodity prices, driven by corn and soybean prices drive dairy families out of business, and drive feed costs so high that ranchers can't afford supplemental feeds, grain or forages, to get these families through the devastating drought, to say nothing about higher and higher grocery prices for everyone....

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