A study shows a statistical correlation between corn prices and yields, showing that when prices rise, farmers make changes to produce higher yields.
Researchers at North Carolina State University and the University of Illinois at Chicago found that, generally, when corn prices rise or are expected to be higher, farmers often invest in new equipment to increase yields.
The study supports yield-price elasticity, according to a release. Researchers also found that farmers react to lower prices.
"Based on these findings there is no question that price has an effect on yields," said Jay Lynch, board director for the Iowa Corn Growers Association, in a release. "And given the factors involved in achieving higher yields, such as investment in new equipment, it is likely that new, higher yields resulting from high prices are sustained even after prices drop."
Barry Goodwin, a distinguished professor of agricultural and resource economics at North Carolina State, said in a release that farmers are most influenced by early price swings, during the period from February through April.