Credit Suisse Analysts Say Corn Undervalued Versus Crude Oil
CHICAGO -- Corn futures prices and crude oil prices have both hit record highs in recent days, but one analyst said the grain's price is sharply undervalued when comparing the energy
value to oil.
"Corn has energy value whether we like or not, so the market is increasingly willing to value it on that basis. If crude oil is worth $120/barrel, the market is valuing oil at $0.021 per thousand btus. If so, a bushel of corn would be worth $8.20/bushel in terms of combustible value. We get similar value if we convert it into ethanol, <b>but only if we include the $0.51/gallon federal
subsidy,"</b> said Robert Moskow, U.S. food and agribusiness analyst at Credit Suisse, in a research note.
CHICAGO -- Corn futures prices and crude oil prices have both hit record highs in recent days, but one analyst said the grain's price is sharply undervalued when comparing the energy
value to oil.
"Corn has energy value whether we like or not, so the market is increasingly willing to value it on that basis. If crude oil is worth $120/barrel, the market is valuing oil at $0.021 per thousand btus. If so, a bushel of corn would be worth $8.20/bushel in terms of combustible value. We get similar value if we convert it into ethanol, <b>but only if we include the $0.51/gallon federal
subsidy,"</b> said Robert Moskow, U.S. food and agribusiness analyst at Credit Suisse, in a research note.
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