Corn Storage Capacity increase and supply chain impact

An article in Bloombergbusinessweek (Jan 9, 2012) describes a significant increase in corn storage capacity at the farm level. The result, farmers hold their crop to sell at the best price, thus corn prices have increased 23 % over the previous year.  Inventory holding capacity also means that entities such as Cargill are forced to negotiate with farmers and pay a premium over futures prices to get delivery.  Will the supply chain power due to corn storage capacity remain at the level observed in the long run ? Given the higher wholesale prices, will downstream demand be expected to drop ? Is there a risk that farmers will face even more volatile prices as the timing of inventory availability starts depending on inventory release ?

About aviyer2010

This entry was posted in Operations Management, Service Operations, Supply Chain Issues and tagged , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s