Sunday, November 27, 2011

Sugar and corn connection

"Corn and sugar are becoming increasingly linked in the global markets, something that has implications for the prices of both commodities." from Agrimoney
Sugar is used as a sweetener and bioethanol simialr to corn. Hence, there is a substitution between these two crops that did not exist in years past. 

It may not show-up in short-term correlation but the relationship between corn, sugar, and oil is going higher. The cost of production in corn is more driven by oil. The output is oil driven. The same is true of sugar. 

The role of corn as a sweetener is also increasing. Corn syrup has been a cheap substitute for sugar. This relative cost will create a further link. 

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