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 ?

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About aviyer2010

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

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