Placing the 2006/08 Commodity Price Boom into Perspective
The 2006-08 commodity price boom was one of the longest and broadest of the post-World War II period. Apart from strong and sustained economic growth, the recent boom was fueled by numerous factors, including low past investment in extractive commo...
| Main Authors: | , |
|---|---|
| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
|
| Subjects: | |
| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100721110120 http://hdl.handle.net/10986/3855 |
| id |
okr-10986-3855 |
|---|---|
| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
AGRICULTURAL COMMODITIES AGRICULTURAL COMMODITY AGRICULTURAL PRICE AGRICULTURAL PRICES APPROACH ASSET MANAGERS ASSET PRICES AVAILABILITY AVERAGE PRICE BACKBONE BANDWIDTH BARRELS PER DAY BARTER BUFFER STOCKS CENTRAL BANK CEREAL PRICES COFFEE PRICES COMMERCE COMMERCIAL ACTIVITY COMMERCIAL BANK COMMODITIES COMMODITY COMMODITY BOOM COMMODITY BOOMS COMMODITY EXCHANGES COMMODITY FUTURES COMMODITY INDEX COMMODITY MARKET COMMODITY MARKETS COMMODITY PRICE COMMODITY PRICE INDEX COMMODITY PRICE INDICES COMMODITY PRICES COMMODITY PRODUCERS COMMODITY SECTORS COMMODITY TRADING COTTON PRICES CRUDE OIL CRUDE OIL PRICE CURRENCY DEBT DEMAND GROWTH DEVELOPING COUNTRIES DEVELOPING COUNTRY DIVERSIFICATION BENEFITS DOMESTIC MARKETS ECONOMIC ACTIVITY ECONOMIC COOPERATION ECONOMIC CRISIS ECONOMIC DEVELOPMENT ECONOMIC DOWNTURN EFFICIENT MARKET EMERGING ECONOMIES ENERGY MARKETS ENERGY PRICE ENERGY PRICES ENVIRONMENTAL BENEFITS EQUILIBRIUM PRICE EQUITIES ETHANOL ETHANOL PRODUCTION EXCESS LIQUIDITY EXCHANGE MARKET EXCHANGE MARKETS EXCHANGE RATE EXCHANGE RATES EXPENDITURES FEEDSTOCK FEEDSTOCKS FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL TRANSACTIONS FOOD COMMODITIES FOOD COMMODITY FOOD PRICE FOOD PRICES FOSSIL FOSSIL FUEL FOSSIL FUEL USE FUEL FUEL CONSUMPTION FUEL PRODUCTION FUND MANAGERS FUTURE PRICE FUTURES FUTURES CONTRACT FUTURES MARKET FUTURES MARKETS FUTURES TRADING GAS COMPANIES GASOLINE GASOLINE PRICES GLOBAL ECONOMIC PROSPECTS GLOBAL ECONOMY GLOBALIZATION GOVERNMENT INTERVENTION GOVERNMENT POLICIES GREENHOUSE GASES GROWTH RATES HEDGE FUND HEDGE FUNDS HEDGING HIGH ENERGY INTENSITY INCOME INCOMES INFLATION INSURANCE INTEREST RATE INTEREST RATES INTERNATIONAL COCOA AGREEMENT INTERNATIONAL COMMODITY AGREEMENTS INVENTORIES INVESTMENT PORTFOLIOS INVESTMENT VEHICLE INVESTMENT VEHICLES INVISIBLE HAND LIMITS TO GROWTH LIQUID ASSETS MANUFACTURING MARKET CONDITIONS MARKET DEVELOPMENTS MARKET EFFICIENCY MARKET FAILURE MARKET INEFFICIENCIES MARKET INTEGRATION MARKET MANIPULATION MARKET PRICE MARKET PRICES MARKET VOLATILITY MARKETING MONETARY POLICY NATURAL GAS NEW TECHNOLOGY NITROGEN NITROGEN FERTILIZER OIL MARKETS OIL PRICES OIL PRODUCTION OIL SHOCKS OIL SPILLS OILS OUTPUT OUTPUTS PENSION PENSION FUNDS PETROLEUM PETROLEUM PRICES PORTFOLIO PORTFOLIOS PRICE BEHAVIOR PRICE CHANGES PRICE DISCOVERY PRICE FORECAST PRICE INCREASE PRICE INCREASES PRICE INDEX PRICE INDICES PRICE LEVELS PRICE MOVEMENTS PRICE OF OIL PRICE SERIES PRICE SPIKES PRICE STABILIZATION PRICE TRENDS PRICE VOLATILITY PRICES OF ENERGY PRIMARY COMMODITIES PRIMARY COMMODITY PRODUCTION OF ETHANOL PRODUCTIVITY PUBLIC POLICY R&D RAW MATERIALS REAL ESTATE RENEWABLE ENERGY RESULT RESULTS RETAIL SEARCH SECURITIES SECURITY CONCERNS SOYBEAN OIL SPECULATIVE BUBBLE SPOT PRICE SPREAD STOCKS STORAGE FACILITIES SUBSTITUTE SUPPLY SHOCKS TARGETS TIME PERIOD TRADING ACTIVITIES TRANSACTION TRANSMISSION USES VOLATILITY WEB WEBLOG WORLD ECONOMY WORLD MARKET WORLD TRADE |
| spellingShingle |
AGRICULTURAL COMMODITIES AGRICULTURAL COMMODITY AGRICULTURAL PRICE AGRICULTURAL PRICES APPROACH ASSET MANAGERS ASSET PRICES AVAILABILITY AVERAGE PRICE BACKBONE BANDWIDTH BARRELS PER DAY BARTER BUFFER STOCKS CENTRAL BANK CEREAL PRICES COFFEE PRICES COMMERCE COMMERCIAL ACTIVITY COMMERCIAL BANK COMMODITIES COMMODITY COMMODITY BOOM COMMODITY BOOMS COMMODITY EXCHANGES COMMODITY FUTURES COMMODITY INDEX COMMODITY MARKET COMMODITY MARKETS COMMODITY PRICE COMMODITY PRICE INDEX COMMODITY PRICE INDICES COMMODITY PRICES COMMODITY PRODUCERS COMMODITY SECTORS COMMODITY TRADING COTTON PRICES CRUDE OIL CRUDE OIL PRICE CURRENCY DEBT DEMAND GROWTH DEVELOPING COUNTRIES DEVELOPING COUNTRY DIVERSIFICATION BENEFITS DOMESTIC MARKETS ECONOMIC ACTIVITY ECONOMIC COOPERATION ECONOMIC CRISIS ECONOMIC DEVELOPMENT ECONOMIC DOWNTURN EFFICIENT MARKET EMERGING ECONOMIES ENERGY MARKETS ENERGY PRICE ENERGY PRICES ENVIRONMENTAL BENEFITS EQUILIBRIUM PRICE EQUITIES ETHANOL ETHANOL PRODUCTION EXCESS LIQUIDITY EXCHANGE MARKET EXCHANGE MARKETS EXCHANGE RATE EXCHANGE RATES EXPENDITURES FEEDSTOCK FEEDSTOCKS FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL TRANSACTIONS FOOD COMMODITIES FOOD COMMODITY FOOD PRICE FOOD PRICES FOSSIL FOSSIL FUEL FOSSIL FUEL USE FUEL FUEL CONSUMPTION FUEL PRODUCTION FUND MANAGERS FUTURE PRICE FUTURES FUTURES CONTRACT FUTURES MARKET FUTURES MARKETS FUTURES TRADING GAS COMPANIES GASOLINE GASOLINE PRICES GLOBAL ECONOMIC PROSPECTS GLOBAL ECONOMY GLOBALIZATION GOVERNMENT INTERVENTION GOVERNMENT POLICIES GREENHOUSE GASES GROWTH RATES HEDGE FUND HEDGE FUNDS HEDGING HIGH ENERGY INTENSITY INCOME INCOMES INFLATION INSURANCE INTEREST RATE INTEREST RATES INTERNATIONAL COCOA AGREEMENT INTERNATIONAL COMMODITY AGREEMENTS INVENTORIES INVESTMENT PORTFOLIOS INVESTMENT VEHICLE INVESTMENT VEHICLES INVISIBLE HAND LIMITS TO GROWTH LIQUID ASSETS MANUFACTURING MARKET CONDITIONS MARKET DEVELOPMENTS MARKET EFFICIENCY MARKET FAILURE MARKET INEFFICIENCIES MARKET INTEGRATION MARKET MANIPULATION MARKET PRICE MARKET PRICES MARKET VOLATILITY MARKETING MONETARY POLICY NATURAL GAS NEW TECHNOLOGY NITROGEN NITROGEN FERTILIZER OIL MARKETS OIL PRICES OIL PRODUCTION OIL SHOCKS OIL SPILLS OILS OUTPUT OUTPUTS PENSION PENSION FUNDS PETROLEUM PETROLEUM PRICES PORTFOLIO PORTFOLIOS PRICE BEHAVIOR PRICE CHANGES PRICE DISCOVERY PRICE FORECAST PRICE INCREASE PRICE INCREASES PRICE INDEX PRICE INDICES PRICE LEVELS PRICE MOVEMENTS PRICE OF OIL PRICE SERIES PRICE SPIKES PRICE STABILIZATION PRICE TRENDS PRICE VOLATILITY PRICES OF ENERGY PRIMARY COMMODITIES PRIMARY COMMODITY PRODUCTION OF ETHANOL PRODUCTIVITY PUBLIC POLICY R&D RAW MATERIALS REAL ESTATE RENEWABLE ENERGY RESULT RESULTS RETAIL SEARCH SECURITIES SECURITY CONCERNS SOYBEAN OIL SPECULATIVE BUBBLE SPOT PRICE SPREAD STOCKS STORAGE FACILITIES SUBSTITUTE SUPPLY SHOCKS TARGETS TIME PERIOD TRADING ACTIVITIES TRANSACTION TRANSMISSION USES VOLATILITY WEB WEBLOG WORLD ECONOMY WORLD MARKET WORLD TRADE Baffes, John Haniotis, Tassos Placing the 2006/08 Commodity Price Boom into Perspective |
| geographic_facet |
The World Region The World Region |
| relation |
Policy Research working paper ; no. WPS 5371 |
| description |
The 2006-08 commodity price boom was one
of the longest and broadest of the post-World War II period.
Apart from strong and sustained economic growth, the recent
boom was fueled by numerous factors, including low past
investment in extractive commodities, weak dollar, fiscal
expansion, and lax monetary policy in many countries, and
investment fund activity. At the same time, the combination
of adverse weather conditions, the diversion of some food
commodities to the production of biofuels, and government
policies (including export bans and prohibitive taxes)
brought global stocks of many food commodities down to
levels not seen since the early 1970s. This in turn
accelerated the price increases that eventually led to the
2008 rally. The weakening and/or reversal of these factors
coupled with the financial crisis that erupted in September
2008 and the subsequent global economic downturn, induced
sharp price declines across most commodity sectors. Yet, the
main price indices are still twice as high compared to their
2000 real levels, begging once more the question about the
real factors affecting them. This paper concludes that a
stronger link between energy and non-energy commodity prices
is likely to be the dominant influence on developments in
commodity, and especially food, markets. Demand by emerging
economies is unlikely to put additional pressure on the
prices of food commodities. The paper also argues that the
effect of biofuels on food prices has not been as large as
originally thought, but that the use of commodities by
financial investors (the so-called "financialization of
commodities") may have been partly responsible for the
2007/08 spike. Finally, econometric analysis of the
long-term evolution of commodity prices supports the thesis
that price variability overwhelms price trends. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Baffes, John Haniotis, Tassos |
| author_facet |
Baffes, John Haniotis, Tassos |
| author_sort |
Baffes, John |
| title |
Placing the 2006/08 Commodity Price Boom into Perspective |
| title_short |
Placing the 2006/08 Commodity Price Boom into Perspective |
| title_full |
Placing the 2006/08 Commodity Price Boom into Perspective |
| title_fullStr |
Placing the 2006/08 Commodity Price Boom into Perspective |
| title_full_unstemmed |
Placing the 2006/08 Commodity Price Boom into Perspective |
| title_sort |
placing the 2006/08 commodity price boom into perspective |
| publishDate |
2012 |
| url |
http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100721110120 http://hdl.handle.net/10986/3855 |
| _version_ |
1764388686419460096 |
| spelling |
okr-10986-38552021-04-23T14:02:13Z Placing the 2006/08 Commodity Price Boom into Perspective Baffes, John Haniotis, Tassos AGRICULTURAL COMMODITIES AGRICULTURAL COMMODITY AGRICULTURAL PRICE AGRICULTURAL PRICES APPROACH ASSET MANAGERS ASSET PRICES AVAILABILITY AVERAGE PRICE BACKBONE BANDWIDTH BARRELS PER DAY BARTER BUFFER STOCKS CENTRAL BANK CEREAL PRICES COFFEE PRICES COMMERCE COMMERCIAL ACTIVITY COMMERCIAL BANK COMMODITIES COMMODITY COMMODITY BOOM COMMODITY BOOMS COMMODITY EXCHANGES COMMODITY FUTURES COMMODITY INDEX COMMODITY MARKET COMMODITY MARKETS COMMODITY PRICE COMMODITY PRICE INDEX COMMODITY PRICE INDICES COMMODITY PRICES COMMODITY PRODUCERS COMMODITY SECTORS COMMODITY TRADING COTTON PRICES CRUDE OIL CRUDE OIL PRICE CURRENCY DEBT DEMAND GROWTH DEVELOPING COUNTRIES DEVELOPING COUNTRY DIVERSIFICATION BENEFITS DOMESTIC MARKETS ECONOMIC ACTIVITY ECONOMIC COOPERATION ECONOMIC CRISIS ECONOMIC DEVELOPMENT ECONOMIC DOWNTURN EFFICIENT MARKET EMERGING ECONOMIES ENERGY MARKETS ENERGY PRICE ENERGY PRICES ENVIRONMENTAL BENEFITS EQUILIBRIUM PRICE EQUITIES ETHANOL ETHANOL PRODUCTION EXCESS LIQUIDITY EXCHANGE MARKET EXCHANGE MARKETS EXCHANGE RATE EXCHANGE RATES EXPENDITURES FEEDSTOCK FEEDSTOCKS FINANCIAL CRISIS FINANCIAL INSTITUTIONS FINANCIAL MARKETS FINANCIAL TRANSACTIONS FOOD COMMODITIES FOOD COMMODITY FOOD PRICE FOOD PRICES FOSSIL FOSSIL FUEL FOSSIL FUEL USE FUEL FUEL CONSUMPTION FUEL PRODUCTION FUND MANAGERS FUTURE PRICE FUTURES FUTURES CONTRACT FUTURES MARKET FUTURES MARKETS FUTURES TRADING GAS COMPANIES GASOLINE GASOLINE PRICES GLOBAL ECONOMIC PROSPECTS GLOBAL ECONOMY GLOBALIZATION GOVERNMENT INTERVENTION GOVERNMENT POLICIES GREENHOUSE GASES GROWTH RATES HEDGE FUND HEDGE FUNDS HEDGING HIGH ENERGY INTENSITY INCOME INCOMES INFLATION INSURANCE INTEREST RATE INTEREST RATES INTERNATIONAL COCOA AGREEMENT INTERNATIONAL COMMODITY AGREEMENTS INVENTORIES INVESTMENT PORTFOLIOS INVESTMENT VEHICLE INVESTMENT VEHICLES INVISIBLE HAND LIMITS TO GROWTH LIQUID ASSETS MANUFACTURING MARKET CONDITIONS MARKET DEVELOPMENTS MARKET EFFICIENCY MARKET FAILURE MARKET INEFFICIENCIES MARKET INTEGRATION MARKET MANIPULATION MARKET PRICE MARKET PRICES MARKET VOLATILITY MARKETING MONETARY POLICY NATURAL GAS NEW TECHNOLOGY NITROGEN NITROGEN FERTILIZER OIL MARKETS OIL PRICES OIL PRODUCTION OIL SHOCKS OIL SPILLS OILS OUTPUT OUTPUTS PDF PENSION PENSION FUNDS PETROLEUM PETROLEUM PRICES PORTFOLIO PORTFOLIOS PRICE BEHAVIOR PRICE CHANGES PRICE DISCOVERY PRICE FORECAST PRICE INCREASE PRICE INCREASES PRICE INDEX PRICE INDICES PRICE LEVELS PRICE MOVEMENTS PRICE OF OIL PRICE SERIES PRICE SPIKES PRICE STABILIZATION PRICE TRENDS PRICE VOLATILITY PRICES OF ENERGY PRIMARY COMMODITIES PRIMARY COMMODITY PRODUCTION OF ETHANOL PRODUCTIVITY PUBLIC POLICY R&D RAW MATERIALS REAL ESTATE RENEWABLE ENERGY RESULT RESULTS RETAIL SEARCH SECURITIES SECURITY CONCERNS SOYBEAN OIL SPECULATIVE BUBBLE SPOT PRICE SPREAD STOCKS STORAGE FACILITIES SUBSTITUTE SUPPLY SHOCKS TARGETS TIME PERIOD TRADING ACTIVITIES TRANSACTION TRANSMISSION USES VOLATILITY WEB WEBLOG WORLD ECONOMY WORLD MARKET WORLD TRADE The 2006-08 commodity price boom was one of the longest and broadest of the post-World War II period. Apart from strong and sustained economic growth, the recent boom was fueled by numerous factors, including low past investment in extractive commodities, weak dollar, fiscal expansion, and lax monetary policy in many countries, and investment fund activity. At the same time, the combination of adverse weather conditions, the diversion of some food commodities to the production of biofuels, and government policies (including export bans and prohibitive taxes) brought global stocks of many food commodities down to levels not seen since the early 1970s. This in turn accelerated the price increases that eventually led to the 2008 rally. The weakening and/or reversal of these factors coupled with the financial crisis that erupted in September 2008 and the subsequent global economic downturn, induced sharp price declines across most commodity sectors. Yet, the main price indices are still twice as high compared to their 2000 real levels, begging once more the question about the real factors affecting them. This paper concludes that a stronger link between energy and non-energy commodity prices is likely to be the dominant influence on developments in commodity, and especially food, markets. Demand by emerging economies is unlikely to put additional pressure on the prices of food commodities. The paper also argues that the effect of biofuels on food prices has not been as large as originally thought, but that the use of commodities by financial investors (the so-called "financialization of commodities") may have been partly responsible for the 2007/08 spike. Finally, econometric analysis of the long-term evolution of commodity prices supports the thesis that price variability overwhelms price trends. 2012-03-19T18:41:01Z 2012-03-19T18:41:01Z 2010-07-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100721110120 http://hdl.handle.net/10986/3855 English Policy Research working paper ; no. WPS 5371 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper The World Region The World Region |