What Explains Agricultural Price Movements?

After 2005, commodity prices experienced their longest and broadest boom since World War II. Agricultural prices have now come down considerably since their 2011 peak, but are still 40 percent higher in real terms than their 2000 lows. This paper b...

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Main Authors:	Baffes, John, Haniotis, Tassos
Format:	Working Paper
Language:	English en_US
Published:	2016
Subjects:	FOOD PRICE MARKET DEVELOPMENTS MONETARY POLICY UNCERTAINTIES PRICE LEVELS FOREIGN INVESTMENT PRICE INCREASES DEVELOPING COUNTRIES COST OF CAPITAL STOCK ENERGY PRICES INFORMATION SYSTEM SECURITY CONCERNS PRICE UNCERTAINTIES INCOME INTEREST PURCHASING‐POWER COMMODITY PRICE EMERGING ECONOMIES INTEREST RATE EXCHANGE TREASURIES PRODUCER PRICES FOOD PRICES PRICE INDICES FISCAL POLICY EXCHANGE RATE PRICE MARKET FAILURE SUPPLY SCHEDULE PRICE TREND ASSET VALUES TREASURY BILL SUPPLY SCHEDULES PRICE VOLATILITY INFLATION DEVELOPING COUNTRY PRICE VARIATION CENTRAL BANK MARKET PARTICIPANTS PUBLIC POLICY NATURAL GAS PRICES GLOBAL ECONOMY AGRICULTURAL COMMODITIES CURRENCY DEVELOPMENT ECONOMICS EXCHANGE RATE MOVEMENTS RESERVE BANK INFLATIONARY PRESSURES PRODUCTS EXCHANGE RATES INTEREST RATES MARKET FAILURES NATURAL DISASTERS DEBT MARKETING MARKETS BORROWING COUNTRIES AGRICULTURAL PRICES PRODUCT AGRICULTURAL PRICE NATURAL RESOURCES INVENTORY MARKET PRICE PRICE INFLATION EXPENDITURE COMMODITY‐PRICE CONSUMPTION FEDERAL RESERVE PRICE TRENDS FEDERAL RESERVE BANK POLICIES VOLATILITY FINANCIAL CRISIS STANDARD OF LIVING FUTURE VALUE POLICY MAKERS DEMAND AGGREGATE DEMAND NOMINAL INTEREST RATES PRICE LEVEL CONSUMER PRICE PRICE CHANGES INCOMES PRICES INDEX PRICE FLUCTUATIONS DEMAND GROWTH CEREAL PRICES MARKET POLICY TREASURY PRICE MOVEMENTS INSURANCE CURRENCIES COMMODITY PRICES ECONOMIC DEVELOPMENT TRADE NATURAL GAS SECURITY STOCKS INVESTMENT COAL SUPPLY PURCHASING INSURANCE MECHANISMS COMMODITY MARKETS POWER‐PARITY INVESTMENTS CONSUMER PRICE INDEX PRICE INDEX PRICE OF COAL TOTAL DEMAND COMMODITIES COMMODITY PRICES ENERGY PRICE STORAGE
Online Access:	http://documents.worldbank.org/curated/en/2016/03/26002712/explains-agricultural-price-movements http://hdl.handle.net/10986/23927

id	okr-10986-23927
recordtype	oai_dc
spelling	okr-10986-239272021-04-23T14:04:18Z What Explains Agricultural Price Movements? Baffes, John Haniotis, Tassos FOOD PRICE MARKET DEVELOPMENTS MONETARY POLICY UNCERTAINTIES PRICE LEVELS FOREIGN INVESTMENT PRICE INCREASES DEVELOPING COUNTRIES COST OF CAPITAL STOCK ENERGY PRICES MARKET DEVELOPMENTS INFORMATION SYSTEM SECURITY CONCERNS PRICE UNCERTAINTIES INCOME INTEREST PURCHASING‐POWER COMMODITY PRICE EMERGING ECONOMIES INTEREST RATE EXCHANGE TREASURIES DEVELOPING COUNTRIES PRODUCER PRICES FOOD PRICES PRICE INDICES FISCAL POLICY EXCHANGE RATE PRICE MARKET FAILURE SUPPLY SCHEDULE PRICE TREND ASSET VALUES INTEREST RATE TREASURY BILL SUPPLY SCHEDULES PRICE VOLATILITY INFLATION PRICE INCREASES DEVELOPING COUNTRY PRICE VARIATION CENTRAL BANK MARKET PARTICIPANTS ASSET VALUES PUBLIC POLICY NATURAL GAS PRICES PRICE INDICES GLOBAL ECONOMY INFORMATION SYSTEM AGRICULTURAL COMMODITIES CURRENCY DEVELOPMENT ECONOMICS EXCHANGE RATE MOVEMENTS RESERVE BANK EMERGING ECONOMIES PRICE VOLATILITY FOOD PRICE INFLATIONARY PRESSURES PRODUCTS EXCHANGE RATES INTEREST RATES MARKET FAILURES PUBLIC POLICY NATURAL DISASTERS DEBT MARKETING MARKETS INTEREST RATES BORROWING COUNTRIES AGRICULTURAL PRICES EXCHANGE RATE MOVEMENTS SUPPLY SCHEDULES PRODUCT AGRICULTURAL PRICE NATURAL RESOURCES INVENTORY AGRICULTURAL PRICES COMMODITY PRICE MARKET PRICE PRICE INFLATION EXPENDITURE COMMODITY‐PRICE CONSUMPTION FEDERAL RESERVE PRICE TRENDS FEDERAL RESERVE BANK POLICIES VOLATILITY MARKET FAILURES FINANCIAL CRISIS STANDARD OF LIVING AGRICULTURAL PRICE FUTURE GLOBAL ECONOMY VALUE POLICY MAKERS FOREIGN INVESTMENT DEMAND AGGREGATE DEMAND NOMINAL INTEREST RATES PRICE LEVEL CONSUMER PRICE PRICE CHANGES INCOMES PRICES INDEX PRICE FLUCTUATIONS EXCHANGE RATES BORROWING COUNTRIES FEDERAL RESERVE DEMAND GROWTH CEREAL PRICES MARKET ENERGY PRICES POLICY TREASURY PRICE MOVEMENTS INSURANCE CURRENCIES COMMODITY PRICES ECONOMIC DEVELOPMENT TRADE MARKET FAILURE NATURAL GAS COST OF CAPITAL SECURITY STOCKS INVESTMENT COAL SUPPLY PURCHASING INSURANCE MECHANISMS COMMODITY MARKETS POWER‐PARITY FEDERAL RESERVE BANK INVESTMENTS CONSUMER PRICE INDEX PRICE INDEX PRICE OF COAL NOMINAL INTEREST RATES TOTAL DEMAND COMMODITIES EXCHANGE RATE PRICE LEVELS FOOD PRICES PRICE MOVEMENTS PRICE INDEX FEDERAL RESERVE BANK COMMODITY PRICES COMMODITY PRICES ENERGY PRICE COST OF CAPITAL SUPPLY SCHEDULE STORAGE After 2005, commodity prices experienced their longest and broadest boom since World War II. Agricultural prices have now come down considerably since their 2011 peak, but are still 40 percent higher in real terms than their 2000 lows. This paper briefly addresses the main arguments on the causes of the agricultural price cycle. It broadens the scope of analysis by focusing on six agricultural commodities, and identifies the relative weights of key quantifiable drivers of their prices. It concludes that increases in real income negatively affect real agricultural prices, as predicted by Engel's Law. Energy prices matter most (not surprisingly, given the energy-intensive nature of agriculture), followed by stock-to-use ratios and, to a lesser extent, exchange rate movements. The cost of capital affects prices only marginally, probably because it not only influences demand, but also evokes a supply response. 2016-03-10T16:30:33Z 2016-03-10T16:30:33Z 2016-03 Working Paper http://documents.worldbank.org/curated/en/2016/03/26002712/explains-agricultural-price-movements http://hdl.handle.net/10986/23927 English en_US Policy Research Working Paper;No. 7589 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	FOOD PRICE MARKET DEVELOPMENTS MONETARY POLICY UNCERTAINTIES PRICE LEVELS FOREIGN INVESTMENT PRICE INCREASES DEVELOPING COUNTRIES COST OF CAPITAL STOCK ENERGY PRICES MARKET DEVELOPMENTS INFORMATION SYSTEM SECURITY CONCERNS PRICE UNCERTAINTIES INCOME INTEREST PURCHASING‐POWER COMMODITY PRICE EMERGING ECONOMIES INTEREST RATE EXCHANGE TREASURIES DEVELOPING COUNTRIES PRODUCER PRICES FOOD PRICES PRICE INDICES FISCAL POLICY EXCHANGE RATE PRICE MARKET FAILURE SUPPLY SCHEDULE PRICE TREND ASSET VALUES INTEREST RATE TREASURY BILL SUPPLY SCHEDULES PRICE VOLATILITY INFLATION PRICE INCREASES DEVELOPING COUNTRY PRICE VARIATION CENTRAL BANK MARKET PARTICIPANTS ASSET VALUES PUBLIC POLICY NATURAL GAS PRICES PRICE INDICES GLOBAL ECONOMY INFORMATION SYSTEM AGRICULTURAL COMMODITIES CURRENCY DEVELOPMENT ECONOMICS EXCHANGE RATE MOVEMENTS RESERVE BANK EMERGING ECONOMIES PRICE VOLATILITY FOOD PRICE INFLATIONARY PRESSURES PRODUCTS EXCHANGE RATES INTEREST RATES MARKET FAILURES PUBLIC POLICY NATURAL DISASTERS DEBT MARKETING MARKETS INTEREST RATES BORROWING COUNTRIES AGRICULTURAL PRICES EXCHANGE RATE MOVEMENTS SUPPLY SCHEDULES PRODUCT AGRICULTURAL PRICE NATURAL RESOURCES INVENTORY AGRICULTURAL PRICES COMMODITY PRICE MARKET PRICE PRICE INFLATION EXPENDITURE COMMODITY‐PRICE CONSUMPTION FEDERAL RESERVE PRICE TRENDS FEDERAL RESERVE BANK POLICIES VOLATILITY MARKET FAILURES FINANCIAL CRISIS STANDARD OF LIVING AGRICULTURAL PRICE FUTURE GLOBAL ECONOMY VALUE POLICY MAKERS FOREIGN INVESTMENT DEMAND AGGREGATE DEMAND NOMINAL INTEREST RATES PRICE LEVEL CONSUMER PRICE PRICE CHANGES INCOMES PRICES INDEX PRICE FLUCTUATIONS EXCHANGE RATES BORROWING COUNTRIES FEDERAL RESERVE DEMAND GROWTH CEREAL PRICES MARKET ENERGY PRICES POLICY TREASURY PRICE MOVEMENTS INSURANCE CURRENCIES COMMODITY PRICES ECONOMIC DEVELOPMENT TRADE MARKET FAILURE NATURAL GAS COST OF CAPITAL SECURITY STOCKS INVESTMENT COAL SUPPLY PURCHASING INSURANCE MECHANISMS COMMODITY MARKETS POWER‐PARITY FEDERAL RESERVE BANK INVESTMENTS CONSUMER PRICE INDEX PRICE INDEX PRICE OF COAL NOMINAL INTEREST RATES TOTAL DEMAND COMMODITIES EXCHANGE RATE PRICE LEVELS FOOD PRICES PRICE MOVEMENTS PRICE INDEX FEDERAL RESERVE BANK COMMODITY PRICES COMMODITY PRICES ENERGY PRICE COST OF CAPITAL SUPPLY SCHEDULE STORAGE
spellingShingle	FOOD PRICE MARKET DEVELOPMENTS MONETARY POLICY UNCERTAINTIES PRICE LEVELS FOREIGN INVESTMENT PRICE INCREASES DEVELOPING COUNTRIES COST OF CAPITAL STOCK ENERGY PRICES MARKET DEVELOPMENTS INFORMATION SYSTEM SECURITY CONCERNS PRICE UNCERTAINTIES INCOME INTEREST PURCHASING‐POWER COMMODITY PRICE EMERGING ECONOMIES INTEREST RATE EXCHANGE TREASURIES DEVELOPING COUNTRIES PRODUCER PRICES FOOD PRICES PRICE INDICES FISCAL POLICY EXCHANGE RATE PRICE MARKET FAILURE SUPPLY SCHEDULE PRICE TREND ASSET VALUES INTEREST RATE TREASURY BILL SUPPLY SCHEDULES PRICE VOLATILITY INFLATION PRICE INCREASES DEVELOPING COUNTRY PRICE VARIATION CENTRAL BANK MARKET PARTICIPANTS ASSET VALUES PUBLIC POLICY NATURAL GAS PRICES PRICE INDICES GLOBAL ECONOMY INFORMATION SYSTEM AGRICULTURAL COMMODITIES CURRENCY DEVELOPMENT ECONOMICS EXCHANGE RATE MOVEMENTS RESERVE BANK EMERGING ECONOMIES PRICE VOLATILITY FOOD PRICE INFLATIONARY PRESSURES PRODUCTS EXCHANGE RATES INTEREST RATES MARKET FAILURES PUBLIC POLICY NATURAL DISASTERS DEBT MARKETING MARKETS INTEREST RATES BORROWING COUNTRIES AGRICULTURAL PRICES EXCHANGE RATE MOVEMENTS SUPPLY SCHEDULES PRODUCT AGRICULTURAL PRICE NATURAL RESOURCES INVENTORY AGRICULTURAL PRICES COMMODITY PRICE MARKET PRICE PRICE INFLATION EXPENDITURE COMMODITY‐PRICE CONSUMPTION FEDERAL RESERVE PRICE TRENDS FEDERAL RESERVE BANK POLICIES VOLATILITY MARKET FAILURES FINANCIAL CRISIS STANDARD OF LIVING AGRICULTURAL PRICE FUTURE GLOBAL ECONOMY VALUE POLICY MAKERS FOREIGN INVESTMENT DEMAND AGGREGATE DEMAND NOMINAL INTEREST RATES PRICE LEVEL CONSUMER PRICE PRICE CHANGES INCOMES PRICES INDEX PRICE FLUCTUATIONS EXCHANGE RATES BORROWING COUNTRIES FEDERAL RESERVE DEMAND GROWTH CEREAL PRICES MARKET ENERGY PRICES POLICY TREASURY PRICE MOVEMENTS INSURANCE CURRENCIES COMMODITY PRICES ECONOMIC DEVELOPMENT TRADE MARKET FAILURE NATURAL GAS COST OF CAPITAL SECURITY STOCKS INVESTMENT COAL SUPPLY PURCHASING INSURANCE MECHANISMS COMMODITY MARKETS POWER‐PARITY FEDERAL RESERVE BANK INVESTMENTS CONSUMER PRICE INDEX PRICE INDEX PRICE OF COAL NOMINAL INTEREST RATES TOTAL DEMAND COMMODITIES EXCHANGE RATE PRICE LEVELS FOOD PRICES PRICE MOVEMENTS PRICE INDEX FEDERAL RESERVE BANK COMMODITY PRICES COMMODITY PRICES ENERGY PRICE COST OF CAPITAL SUPPLY SCHEDULE STORAGE Baffes, John Haniotis, Tassos What Explains Agricultural Price Movements?
relation	Policy Research Working Paper;No. 7589
description	After 2005, commodity prices experienced their longest and broadest boom since World War II. Agricultural prices have now come down considerably since their 2011 peak, but are still 40 percent higher in real terms than their 2000 lows. This paper briefly addresses the main arguments on the causes of the agricultural price cycle. It broadens the scope of analysis by focusing on six agricultural commodities, and identifies the relative weights of key quantifiable drivers of their prices. It concludes that increases in real income negatively affect real agricultural prices, as predicted by Engel's Law. Energy prices matter most (not surprisingly, given the energy-intensive nature of agriculture), followed by stock-to-use ratios and, to a lesser extent, exchange rate movements. The cost of capital affects prices only marginally, probably because it not only influences demand, but also evokes a supply response.
format	Working Paper
author	Baffes, John Haniotis, Tassos
author_facet	Baffes, John Haniotis, Tassos
author_sort	Baffes, John
title	What Explains Agricultural Price Movements?
title_short	What Explains Agricultural Price Movements?
title_full	What Explains Agricultural Price Movements?
title_fullStr	What Explains Agricultural Price Movements?
title_full_unstemmed	What Explains Agricultural Price Movements?
title_sort	what explains agricultural price movements?
publishDate	2016
url	http://documents.worldbank.org/curated/en/2016/03/26002712/explains-agricultural-price-movements http://hdl.handle.net/10986/23927
_version_	1764455190658809856

What Explains Agricultural Price Movements?

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