Why does the use of ethanol make wheat prices go up?

Question

I heard that since people have begun using ethanol as fuel for their car it has made the price of wheat go up. Why is this?

Answer 1

As demand goes up for ethanol, there will be less corn available for consumption; making other commodities, such as but not limited to, like wheat to become more desired; thus, driving its price higher.

Answer 2

Because land formerly used to grow wheat has been switched to corn.

Answer 3

basically its just competition between wheat for food and fuel.

the farmer would then probably sell to whoever offers the highest price resulting in higher prices

Answer 4

The real question is do the farmers see it ?  I say not much, the money grubbing hoe that he sells it to, makes the dough.

Answer 5

i think the reason is as follows:  with ethanol being used as fuel, the price of corn will go up.  because of this some farmers will start farming corn rather than other crops so they will make the extra money.  with less ppl farming wheat, there will be a smaller supply, therefore the price raises

Answer 6

Corn s  cheaper to manage for fuel. the United States Exports most of the grain to feed rest of the world. If we didn't they all be eating rice and rats !

Answer 7

Its a mater of supply and demand

Large-scale farming is necessary to produce agricultural alcohol and this requires substantial amounts of cultivated land.

There is a concern that as demand for ethanol fuel increases, food crops are replaced by fuel crops, driving food supply down and food prices up. Growing demand for ethanol in the United States has been discussed as a factor in the increased corn prices in Mexico.[71] Average barley prices in the United States rose 17% from January to June 2007 to the highest in 11 years.

Answer 8

Ethanol manufacturers are bidding high for both corn and wheat. The amount of land available to produce either is finite, so total supplies of corn and wheat are at 30 year lows, world wide.

The risk here is that famine will totally destabilize large parts of the world. We have to stop selling food for ethanol production!